Government-led initiatives and improvements in infrastructure will drive EV plug-in adoption of over 10% by 2020, according to global management consultancy PRTM.
It predicted lithium ion battery cost improvements of 50% were possible, assuming EV adoption of 10% by 2020, but these parameters needed to be achieved before total ownership cost approached that of an internal combustion engine.
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According to PRTM, the majority of these battery cost reductions could be achieved simply through optimising design and operations across areas including production/manufacturing, supply chain and product development.
It appears to be a virtuous circle; as battery production volumes increase, process optimisation will drive improvements in production yield rates. This, coupled with scale efficiencies that producers will achieve as they supply packs in volumes exceeding 500,000 units per year, and cells in volumes exceeding 200m units a year, are expected to yield a 20%-25% reduction in battery costs by 2020.
In terms of supply chain design, cell manufacturers, for example, could see 10%-15% cost reductions through pooling material spend and optimising design of their supply chains in phases as volumes increase.
As for product complexity and design. PRTM noted: “As more OEMs release an increasing number of electric vehicles into the market, optimisation of the design platform will reduce product complexity, further reducing battery costs. For example, in this early ramp-up phase, a number of different cell and pack design platforms will emerge due to unique OEM and vehicle requirements.
“On the product design front, there will certainly be ongoing innovation and improvements in material advancement, battery cell and pack design to increase battery performance and thus reduce functional cost. PRTM expects these activities to yield an additional 10% in cost reduction.”
PRTM stresses its research did not factor in additional reductions that could be created by local government manufacturing incentives.
An example of local government EV initiatives came this week with a funding request recently submitted by the Electrical Vehicles for Advanced Cities (EVA) consortium to the European Commission for a continent-wide effort to accelerate EV adoption.
The EVA consists of 19 European cities and regions, together with 17 major European vehicle manufacturers and 12 electricity providers.
PRTM said it collaborated with the Electrification Coalition on the development of the Electrification Roadmap.
