|Chevrolet Bolt (Source)|
Green Car Reports has found out that the replacement cost of a new Chevrolet Bolt EV battery pack is US$15,700 (at retail). Battery costs have fallen 75% over the last 4 years, and with numerous battery giga-factories under construction round the world (18 at my last count!) costs are likely to keep on falling extremely rapidly. Before EVs entered the market for batteries, battery costs were falling by 15% per annum. Let's assume, conservatively, that battery costs will fall by 20% per annum over the next 5 years. This will cut the cost of a Bolt's battery pack from $15,700 to just over $5000. (Remember that's the replacement or retail cost, not the cost of the original equipment, which would be perhaps 20% less.) The total cost of a Bolt is about $35,000 before tax credits, which is the same as the average cost of a car in the USA. So, ceteris paribus, the cost of Bolt should drop to $25,000 in 5 years (before tax credits.)
What about the cheapest cars? In the USA, the cheapest cars currently available cost between $14,000 and $17,000 . So putting in a 60 kWh 200 mile $5000 battery in them would increase their costs to $19,000-$22,000. Except you have to consider the cost of the petrol engine. To replace a worn engine with a reconditioned one costs $2,500 to $4,000. Let's assume that the cost of a new engine and a new automatic transmission, installed during the manufacturing process, totals just $2000. So if you could get the battery cost down to $2000, the cheapest cars would cost the same as or little more than a cheap EV.
Now, the Nissan Leaf has a 30 kWh battery which gives it a 107 miles/172 km range. That's not much range by Tesla or GM Bolt standards, but the average daily car commute in the US is just 25 miles (40 kms) one way, or 50 miles per day. There's no reason why both a family's cars need to have a long range. You'd keep one car for long trips plus commuting and the other just for commuting. The Bolt has a 60 kWh battery capacity which will cost $5000 in 5 years. So a 30 kWh battery pack would be about $2,500 or about the same as the cost of a petrol engine. In other words, in five years, even the cheapest ICE cars in the US will cost be about the same cost as an electric version.
But EVs are much cheaper to run than ICEs. They have fewer moving parts (100 times fewer), they require far less maintenance, and the fear that batteries would have to be frequently replaced turns out to be wrong.
Tesloop, a Tesla-centric ride-hailing company has already driven its first Model S for more 200,000 miles, and seen only an 6% loss in battery life. A battery lifetime of 1,000,000 miles may even be in reach. [Read more here]And in terms of converting the energy from petrol or electricity into kinetic energy, EVs are five times as efficient as ICEs.
This increased lifetime translates directly to a lower cost of ownership: extending an EVs life by 3–4 X means an EVs capital cost, per mile, is 1/3 or 1/4 that of a gasoline-powered vehicle. Better still, the cost of switching from gasoline to electricity delivers another savings of about 1/3 to 1/4 per mile. And electric vehicles do not need oil changes, air filters, or timing belt replacements; the 200,000 mile Tesloop never even had its brakes replaced. The most significant repair cost on an electric vehicle is from worn tires.
For emphasis: The total cost of owning an electric vehicle is, over its entire life, roughly 1/4 to 1/3 the cost of a gasoline-powered vehicle. [Read more here]And that's with current battery costs. Which will probably be at least 2/3rds lower in 5 years. If EVs are cheaper to run and they have the same 'sticker price' as ICEs, no one is going to buy ICE car any more. Especially since EVs are much smoother, much quieter, much more reliable, and more fun to drive.
It's hard to be optimistic about oil demand and the oil price with EVs about to take off in a big way. When the transition to EVs gathers pace, the switch will be as sharp and as disruptive as the replacement of film with digital in cameras. The chart below is very instructive. In just 7 years, sales of film cameras dropped from 100% of the market to nothing. 7 Years! The risk is very, very high that the same thing will happen over the next 7 years to ICEs.
Bad news for oil, bad news for dinosaur car companies, bad news for garages (service stations), but truly excellent news for global warming and urban air pollution.