Summary
- Expectation for prices of lithium to decrease in the future, impacting the longevity of EV batteries and their replacement costs
- Current battery replacements are rare due to their durability, with estimates suggesting the cost to replace an EV battery will be low by 2030
- Estimates indicate that with the decreasing cost of lithium, EV batteries may reach price parity with gas cars in the next couple of years
- Refurbishing and reselling used EV battery packs can offset replacement costs, contributing to the growing used EV market
- Long-term adoption of EVs is expected to increase in the future, driven by economic factors and technological improvements in battery lifespan.
Article
Increasing Energy Density and Durability of EV Batteries
Concerns about the long-term health and replacement costs of electric vehicle (EV) batteries have been a deterrent for many potential buyers. However, a silent revolution in battery manufacturing is underway, focusing on increasing the energy density of batteries and improving their durability. This revolution is expected to impact replacement costs and second-life values, according to a report by battery health and data start-up Recurrent.
Longevity of EV Batteries
Battery replacements are rare, with automakers generally offering warranties of eight years or 100,000 miles on the battery pack. Modern batteries can last twice as long and go double the distance, with Tesla owners frequently reporting minimal degradation even after driving over 200,000 miles. Exceptional cases like a 1.2 million-mile Model S showcase the durability of EV batteries, with an average replacement mileage of 300,000 miles.
Future Battery Replacement Costs
Analysis from Recurrent suggests that the prices of lithium, a key material in EV batteries, are expected to plummet in the coming years. By the end of the decade, cell prices could reach $35 per kWh, resulting in replacement costs of $4,500–$5,000 for a 100 kWh battery pack. These estimates put EV battery replacement costs on par with replacing internal combustion engines, making EV ownership more cost-effective in the long run.
Offsetting Replacement Costs
Owners may have the opportunity to offset battery replacement costs by reselling their used packs as the used EV market is expected to grow substantially in the future. Refurbishing or repurposing used battery packs for energy storage or backup power could provide an additional $10-20 per kWh offset in replacement costs. This trend could potentially make battery replacement a more affordable aspect of EV ownership.
Impact of Falling Lithium Prices
The rapid decline in lithium prices, as projected by Goldman Sachs, is expected to help battery electric vehicles (BEVs) reach ownership cost parity with gas cars in the U.S. within a few years. The significant drop in lithium prices from $149 per kWh in 2023 to $80 per kWh in 2026 will play a vital role in making EVs more economically viable. The regulatory environment under the administration also plays a key role in shaping the EV landscape.
Future of EV Ownership
Despite concerns about battery replacement costs, the overall outlook for EV ownership remains positive. The modern battery’s lifespan is already impressive and expected to improve further. If replacement is necessary, future costs may not be as high as they are today, and various ways of offsetting these costs offer a more sustainable and cost-effective approach to EV ownership. Overall, the future of EV ownership looks promising with technology advancements and falling lithium prices driving the shift towards electric mobility.
Read the full article here
