Potential price reduction from lithium battery packs to 2025
27.07.2012/500/600 Institute for Rare Earths and Metals - The consulting firm McKinsey & Company has published a new analysis which indicates that the cost of lithium battery packs for electric vehicles has risen from the current USD 200-8 per kilowatt hour to USD 2025 per kilowatt Hour could fall within the next 160 years. By 3,50, according to the report, a further price reduction to USD XNUMX per kilowatt hour is possible. The study implies relatively competitive total cost of ownership (TCO) for electric vehicles in the United States. Based on this, prices are believed to be around $ XNUMX per gallon.
The study is based on a bottom-up method, which divides the price of lithium battery packs into 40 basic components for the cost analysis. The analysis includes research into material technology and manufacturing, as well as indirect costs and margins for different segments of the value chain.
According to the executive summary, three factors point to an increasing decline in lithium battery pack prices.
The scale effect: The production scale and an improvement in productivity represent approx. 1/3 of the potential price reductions by 2025.
More Affordable Components: A reduction in component and material prices represent approximately 1/4 of the price reduction.
Power Boost in Battery Technology: Potential technical improvements in cathodes, anodes, and electrolytic solution could increase the performance of the batteries between 80-100% of the current power limit over the next 13 years. These innovations represent 40-50% of total savings opportunities.
A question of the total cost of ownership?
One of the challenges facing owners of electronic cars, as opposed to conventional gasoline vehicles, is the relatively high cost. When buying an electric car, some factors have to be included in the total cost of ownership. These consist of the purchase of the vehicle, disposal and commissioning.
A Green Tech Media Smart Grid report estimates total cost of ownership in dollars per mile driven, acquisition and disposal costs, and lifetime commissioning costs.
The purchase prices for electric vehicles are generally higher than for internal combustion vehicles, as the lithium batteries add additional costs of USD 10.000-20.0000. In Canada, the basic models of the vElectronic 2012 Nissan Leaf from 38.395 USD upwards, while the price of a Chevrolet Volt is USD 41.545. In comparison, the gasoline-powered Nissan Versa Hatchback costs under $ 15.000 and the Chevrolet Cruze $ 15.665. The low adoption rate of electric vehicles indicates that the average consumer does not find this high price to be comfortable.
It is important to note that the criteria for buying electric vehicles vary from country to country and from different demographics. McKinsey researchers have identified two distinct groups. On the one hand the "lovers of electric cars" and on the other the "reluctant conventionals", whose will to pay more to own their own electric vehicle, differs greatly.
Further meaning of the investigation
In addition to the implication regarding the potentially increased market penetration of electric vehicles, lithium investors will also welcome the price-reducing innovations for lithium batteries. These will be realized first in sectors such as consumer electronics, where the global demand for excellent performance and cheaper batteries is high.
"First, we expect the demand for energy storage in the consumer electronics business to remain stable without a radical technological discontinuity," said John Newmann, associate partner at McKinsey. "It is also expected that demand for energy storage will increase significantly in other industries, while prices will fall, such as in the automotive and utilities industries."
Direct benefits for lithium manufacturers and exploration companies
McKinsey expects that there will be considerable interest in expanding lithium production. This is clearly recognizable by the lithium producers and exploration companies as well as by the participants in the battery value chain, who are actively looking for partnerships that ensure them an adequate supply of lithium while being protected from price volatility.
John Newman said that lithium manufacturers and exploration companies will "balance whether and how they can enter into potential partnerships as they seek to do so, To produce materials, Ensuring quality at a price that consumers are willing to pay while striving for stability in demand. "
"Since lithium can be produced as a by-product during the production of other salts, it is likely that additional focus will be on finding partners and markets for these products as well. Ultimately, there may be geographical considerations around lithium production when governments believe that the production of energy storage is critical to national security. This could foster a geographically divergent supply of lithium than the economy might otherwise dictate.
The topic of diverse geography is interesting as resources investors are concerned with the recurring theme of nationalism and the risk contribution that applies to companies who operate in a variety of responsibilities are familiar.
According to the Global Mining & Metals team at Ernst & Young, the overall risk landscape in the mining sector has become significantly more deceptive over the past year. While it is common knowledge that mining is one of the high risk commercial activities, the intensity of the risk can increases vary considerably. This was highlighted by a recently published report by E&Y, listing the top 10 risks facing miners in 2012.
Source: www.institut-seltene-erden.org
