The Goalposts Move: The New Lithium-Ion Standard is An Astonishing $60 per kWh
Until Elon Musk’s Battery Day, the stretch goal was $100/kWh
Just last summer, the much-watched lithium-ion industry finally reached sight of a long-sought super-stretch goal — a battery pack costing $100 per kWh, allowing the price of electric vehicles to drop to that of conventional combustion. But in September, Tesla CEO Elon Musk held “Battery Day,” at which he declared that, to penetrate the mass market, EVs needed a crash diet, and proposed a roadmap to bring down battery prices another 40%, to about $56 per kWh. In March, Volkswagen, too, seemed to promise a battery costing around $60/kWh.
Now, the Energy Department — which tends to define standards across industry — is also targeting $60/kWh at the cell level. In an interview yesterday, Dave Howell, who directs the department’s powerful Office of Vehicles Technologies, told me that the new objective more closely approximates the total cost of the combustion drive train.
The new federal target, which comes just four months after the Energy Department declared $80/kWh at the pack level part of its “Energy Storage Grand Challenge,” appears to have been influenced by the stake in the ground by Musk and VW. But, by adopting their shared aggressive cost-cut goal, the government is regularizing it, making it an objective that mainstream researchers will be expected to eventually meet. It is also another dramatic illustration of how far lithium-ion batteries have come in a decade.
If you mark 2009 as the start of the global EV and batteries race — the year when the U.S., China and other countries embraced electrified transportation as a partial way out of the Great Recession — there was a very different landscape for the technologies: The cost of lithium-ion batteries was about $1,200/kWh. About the only commercial EV was the Tesla Roadster, which had a base sticker price of $109,000. Interest in batteries as a technology was all-but confined to fringe hobbyists or other eccentric souls.
But Howell and his small team at the Energy Department, assigned a budget of several tens of millions of dollars to fund battery and vehicle research, set out to push down battery costs and help to create a commercial EV industry in the U.S.
I found a 2011 slide deck that Howell presented at the Annual Merit Review, the yearly event at which recipients of federal battery funding defend their work. In it, he sets the 2012 battery price target at $500/kWh, a 50% reduction, and $300 by 2014. The eventual goal, with no year listed, was $100 to $150, which Howell and his team thought would be within striking distance of combustion. According to BloombergNEF, a clean energy research house, the average industry cost crossed below $500/kWh somewhere between 2014 and 2015, and $300 between 2015 and 2016. The most cutting-edge battery-makers, such as Panasonic (producing for Tesla) and China’s CATL, are thought to have reached $100/kWh at the cell level last year.
It was Howell’s cash that gave him the power to make such pronouncements. With battery development moving so slowly, investors put comparatively little into the few brave startups, so Howell was more or less calling the shots in the U.S. (this year, he has $400 million for funding). His influence crossed the ocean, too, as researchers in other countries sought grants themselves and also followed the U.S. lead.
Jeff Chamberlain, CEO of Volta Energy Technologies, a venture fund for batteries, who formerly ran the Battery Department at Argonne National Laboratory, told me about a trip to Japan seeking advice for a new battery research hub he was about to lead. The Japanese were exceedingly helpful, to the point where, over dinner and sake, Chamberlain finally asked his hosts why they were being so generous. “After some joking around, the guy said, ‘Every time you in the U.S., sponsored by the [Energy Department], ramp up your activities and expand the horizons of your research, I am able to get more grant capital from the Japanese government,’” Chamberlain said.
Along the way, Howell suggested there were considerable moments of doubt. Teams working on silicon anodes and NMC cathodes were told to stop what they were doing and devote all their attention to fixing specific existential problems with their material. “We got to a point where we saw these systems were not working,” Howell said. “We decided, ‘Let’s back off. Let’s let the researchers think about it. Maybe we’ll get some different ideas.’”
The key moment, he said, was getting to $200/kWh, which according to BNEF was around 2018. That made the industry grasp that aspiration was turning to reality, and Silicon Valley, Wall Street and companies started to pour money into investment. It recently became plain that the entire industry had taken a giant step change forward, making price parity with conventional vehicles seem possible by the middle of the decade.
But when that was understood, the industry was thinking $100/kWh. Now, it seems that the industry has reconsidered and decided that, if you are aiming to sell millions of vehicles to ordinary motorists, you need to get even lower. By getting to $60/kWh, an EV’s total cost of ownership will be 26 cents a mile, Howell said. Combustion is 27 cents.
Howell told me that, when they established the $100/kWh objective, “we weren’t sure how we were going to do it. We were scratching our head. ‘Are we really going to be able to get there?’ But we knew you could get close, and that is what you needed to start commercializing this technology.”
I asked him whether he is surprised that the industry is near the goal. “I am surprised. Not that we couldn’t do $100. But the time has been accelerated,” he said. “You see the acceleration of advances. There is not just market push, but market pull. There is more private investment going in, which helps us focus our resources on the fundamental issues. If you get the problem solved, you know there is a home for this technology. That motivates R & D.”
