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Highlights
- The main way to embrace greater adoption of electric vehicles is to get the prices of battery down and push up driving range.
- Disruptive technologies and gigafactories have the potential to reduce the prices of batteries to make it more affordable.
- Charging infrastructure continues to remain a challenge globally as battery electric vehicles (BEVs) demand more energy from the electric grids.
- Batteries need to be recycled to be more environment friendly.
Insights in this article
Getting to a tipping point
Battery electric vehicle (BEV) manufacturers are trying to lower the cost and improve the driving range on a single charge.
Electric vehicles (EVs) have come of age in the last few years, driven by an urgency among governments worldwide to reduce carbon emissions in the automotive industry as part of their broader effort to cap pollution. What has helped the growing popularity of electric vehicles is their increasing affordability as the cost of batteries have come down. The battery pack for battery electric vehicles (BEVs) used to cost over $1,100 per kilowatt hour (KWh) in 2010. Now BEV batteries costs are inching closer to $100 per kWh, making the cost of EVs comparable to traditional cars in affordability.
Interestingly, EVs preceded the automotive industry and date back to the 1800s. They never, however, became mainstream due to intransigent behavior of consumers, lack of preparation of automakers, incomplete product infrastructure and high costs, among a plethora of factors.
But all that is history. And now, the renewed interest in EVs is for real. It is catalyzed by an all-electric agenda with a radical focus on innovators and early adopters who prize a brand's performance and image above potential detractors such as high cost and charging inconvenience. Government and state subsidies, beneficial policies for EV makers, incentives for buyers, suppliers and consumers are also helping the rapid adoption of EVs.
The BEV disruption is the most significant opportunity for e-mobility businesses that strive for substantial profits and growth. The holy grail is to find a solution to get the battery price down and the driving range up, on a single charge. This is a must to surpass the critical tipping point for BEVs or fully electric vehicles with rechargeable batteries and no gasoline engines.
Tackling the battery challenge
The BEV industry is approaching the battery challenge by embracing a cost leadership strategy.
Incumbent battery manufacturers, automakers, and new entrants are using disruptive technologies and evolving battery chemistries to enhance energy density and charging cycles. The battery industry is investing heavily in innovation and focusing on cost minimization by mitigating raw material and supply chain risks.
Gigafactories, which mass produce batteries in terms of KWh, are producing an estimated 30 to 40 gigawatt hours (GWh) of batteries and battery packs per year, closing the gap in the supply chain of EV batteries. The global battery production capacity could reach over 6,000 GWh by 2030 and help achieve economies of scale.
Combating the charging conundrum
To drive up EV sales, easy, affordable access to public charging infrastructure will have to be ensured.
Today, most EV charging takes place at residences and workplaces. Consumers will increasingly expect the same services and convenience for EVs as they do for conventional vehicles.
In the European Union (EU), the 2014 Alternative Fuel Infrastructure Directive (AFID) recommended that EU member states reach 10 EVs per public charger by 2020. However, in the United States, the number of EVs on roads outpaced the number of public charging points, with about 18 EVs per charging point in 2021, and in the EU, the average EV to charger ratio was 14. China is faring better, with an average of seven EVs per charger, bringing the global average down.
The BEV automakers are addressing charging awareness through in-car navigation capable of rerouting to the nearest charging stations that aren't as busy and account for other recharging needs. Currently, most governments globally, from the US to UK and India, are incentivizing automakers to scale the manufacturing of electric cars. However, government interventions are also required to ensure easy access to charging infrastructure. There is a need to regulate and standardize the format of charging ports, connectors, and equipment to avoid creating redundant, largely incompatible networks and charging gaps.
The road ahead
A BEV customer is driven by a strong sense of practicality.
And the key factors that dominate the decision-making are cost, range, and environmental consciousness. As BEVs demand more energy from the electric grids, their net environmental benefit depends on the power source used to charge them. The electric grid we depend on runs on a mix of fossil fuels and renewable sources, fulfilling the base load and peak demands.
A greener world demands a more distributed grid where individuals or companies can generate, store, and sell electricity through solar plants or the batteries in their EVs serving as virtual power plants.
Lastly, given the large number of BEVs hitting the roads, their batteries will soon hit their end-of-life and it is important for them to be a part of a circular economy. Critical materials inside batteries are highly amenable to end-of-life recycling and can feed back into the supply chain. The recovery and recycling industry must play a vital role in a future sustainable society and economy. Battery recycling in the BEV space can give batteries a second life making them more environmentally friendly.
