sign in sign up
<<
Home , Electric car, Electric vehicle battery, Rivian, Sport utility vehicle, Van

WORKING PAPER 2019-06

Update on electric costs in the United States through 2030

Authors: Nic Lutsey and Michael Nicholas Date: April 2, 2019 Keywords: Electric ; technology cost; total cost of ownership; parity

This working paper assesses battery 2,000,000 costs in the 2020–2030 Rest of world time frame, collecting the best battery Japan pack and electric vehicle component cost data available through 2018. The 1,500,000 assessment also analyzes the antici- Netherlands pated timing for price parity for repre- France sentative electric , crossovers, and 1,000,000 sport utility vehicles compared to their United Kingdom conventional counterparts in Germany the U.S. light-duty vehicle market. 500,000

Annual electric vehicle sale s Canada INTRODUCTION United States The early launch of electric mobility 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 is underway in many parts of the world. Plug-in electric vehicle sales Figure 1. Global light-duty electric vehicle sales, 2010–2018. amounted to more than 2% of new light-duty vehicles in 2018 and expe- availability, cost, convenience, and cost over the 2017–2025 period. The rienced more than 70% sales growth consumer awareness through incen- increased production volume could from 2017 to 2018, culminating in a tives and regulations. further induce market competition worldwide total of 5 million plug-in and innovation in the battery supply electric vehicles at the end of 2018. Several automakers have stated chain, creating greater economies of Figure 1 illustrates the distribution of their intentions to sell more than 15 scale and further cost reductions. electric vehicle sales through 2018 million electric vehicles per year by among 10 countries that make up 2025, up from 1.2 million in 2017 and This paper analyzes projected electric 92% of these sales, showing how the 2 million in 2018.1 This order of mag- vehicle costs from 2018 through 2030. major markets in Asia, Europe, and nitude increase in electric vehicle The primary focus is on fully battery North America have led the market deployment is directly related to the electric vehicles, with associated development to date. Electric vehicle expected decline in battery pack evaluation of plug-in hybrid electric uptake is especially concentrated vehicles, based on bottom-up cost where targeted electric vehicle 1 Nic Lutsey, Modernizing vehicle regulations analyses of -ion battery packs for electrification (ICCT: Washington DC, and other electric components. An policies proactively address electric 2018), https://www.theicct.org/publications/ vehicle barriers related to model modernizing-regulations-electrification assessment is made of the time frame

Acknowledgements: This work was conducted with generous support from the Heising-Simons Foundation. Anup Bandivadekar, Hui He, Pete Slowik, and Sandra Wappelhorst provided critical reviews of an earlier version of the report. Any errors are the authors’ own.

© INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION, 2019 WWW.THEICCT.ORG UPDATE ON ELECTRIC VEHICLE COSTS IN THE UNITED STATES THROUGH 2030

expected for achieving upfront vehicle overall electric vehicle costs. Forecasts, each technical study, the methods cost parity, which is based on initial literature reviewed, and projections generally include in some variation in costs, and first-owner cost compari- without explicit technical specifica- material, process, overhead, deprecia- sons for electric vehicles versus con- tions for battery pack production tion, warranty, and profit; an exception ventional gasoline vehicles. Questions (e.g., material, cell, pack costs; cost is that the Ahmed et al. (2018), cited in about electric vehicle cost parity are versus production volume; bottom-up the Table 1 notes, study excludes profit. broadly important to help inform the cost approach, etc.) are The various studies find somewhat types of regulatory policy and incen- excluded, but applicable automaker different battery cell- and pack-level tives that would be most effective for statements are included. costs, with typical cell-level costs the transition to a mainstream electric making up from 70% to 76% of pack- vehicle market. Table 1 shows level cost. costs projections for 2020–2030 determined by select technical studies The studies in Table 1 also describe BATTERY COSTS of battery production. The studies several key details about the basis for This assessment summarizes several include a variety of different technolo- the battery pack cost. Such details rigorous, detailed, and transparent gies, production volumes, and cost commonly related to cost reduction technical studies published in 2017– elements. Although there are differ- include improved chemistry 2018 that quantify battery pack and ences in the methods described in to reduce the amount of higher-cost

Table 1. Electric vehicle battery pack cost ($/kWh) for 2020–2030, from technical reports and industry announcements.

Type Report 2020 2022 2025 2030 Notes

Ahmed et al., Pouch NMC 6,2,2-graphite, production volume-based; includes total cost to 143 134 122 2018a automaker for material, process, overhead, depreciation, warranty

Cylindrical 21700, NCA 83,13,4, production volume-based; includes cost Anderman, 142 of material, capital, pack integration, labor, overhead, depreciation, R&D, 2017b administration, warranty, profit Pouch NMC 8,1,1-graphite, production volume-based; includes cost of Anderman, Technical 160 128 materials, capital, pack integration, labor, overhead, depreciation, R&D, 2018c reports administration, warranty, profit Pouch NMC 6,2,2-graphite , production volume-based; includes 191 165 120 80 Berckmans et material, process, labor, overhead, depreciation, profit al., 2017d Pouch NMC 6,2,2-silicon alloy anode, production volume-based; includes 317 131 85 50 material, process, labor, overhead, depreciation, profit Pouch NMC 6,2,2-graphite, production volume-based; includes material, UBS, 2017e 184 133 process, labor, overhead, depreciation, profit statement. Associated with planned production volume of Davies, 2017f 152 100,000 per year by 2020 for I.D. series Automaker Lienert & statement related to Bolt (NMC 6,2,2), associated 160 133 statements White, 2018g 2020–2022 production volume has not been stated Tesla statement related to Model 3 production volume of 500,000 with Tesla, 2018h 130 100 Panasonic battery production in Nevada by 2020 Note: NMC = nickel manganese cobalt oxide; NCA = nickel cobalt aluminum (numbers refer to the proportion of each element); Unless cell and pack costs are provided within the study, a pack-to-cell cost ratio of 1.33 is assumed. Unless stated otherwise within the study, matching production volumes to year assumes 100,000 units/year in 2020 and 500,000 units/year for 2025. See studies for additional details, sensitivity analysis, differing chemistries, etc. a Shabbir Ahmed, Paul Nelson, Naresh Susarla, and Dennis Dees, “ Cost Using BatPac” (2018), https://www.iea.org/media/ Workshops/2018/Session2ShabbirAhmedANL.pdf b Menahem Anderman, “The Tesla battery report: Tesla Motors: Battery technology, analysis of the Gigafactory and Model 3, and the automakers’ perspectives” (2017), http://www.totalbatteryconsulting.com/industry-reports/Tesla-report/Extract-from-the-Tesla- Battery-Report.pdf c Menahem Anderman, “The xEV Industry Insider Report” (2018), https://totalbatteryconsulting.com/industry-reports/xEV-report/Extract-from-the-2018- xEV-Industry-Report.pdf d Gert Berckmans, Maarten Messagie, Jelle Smekens, Noshin Omar, Lieselot Vanhaverbeke, and Joeri Mierlo, “Cost Projection of State of the Art Lithium-Ion Batteries for Electric Vehicles Up to 2030,” Energies 10, no. 9 (September 2017): 1314, https://doi.org/10.3390/en10091314 e UBS, “UBS evidence lab electric teardown: Disruption ahead?” (2017), https://neo.ubs.com/shared/d1ZTxnvF2k/ f Chris Davies, “VW I.D. EV boast: We’ll hugely undercut Tesla’s Model 3 says exec,” SlashGear, July 17, 2017, https://www.slashgear.com/vw-i-d-ev-boast- well-hugely-undercut-teslas-model-3-says-exec-17491688/ g Paul Lienert and Joseph White, “GM races to build a formula for profitable electric cars” (January 8, 2018), https://www.reuters.com/article/us-gm- electric-insight/gm-races-to-build-a-formula-for-profitable-electric-cars-idUSKBN1EY0GG h Tesla, “2018 Annual Shareholder Meeting” (June 5, 2018), https://www.tesla.com/shareholdermeeting

2 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION WORKING PAPER 2019-06 UPDATE ON ELECTRIC VEHICLE COSTS IN THE UNITED STATES THROUGH 2030

300 Berckmans et al., 2017 (graphite)

Berckmans et al., 2017 (silicon) 250 Volkswagen, 2017

200 General Motors, 2015 UBS 2018

150 Anderman 2018 (pouch)

Anderman 2017 (cylindrical) 100 Ahmed et al., 2018

BNEF 2018 Battery pack cost ($/kWh) 50 Tesla, 2018

0 2018 2020 2022 2024 2026 2028 2030

Figure 2. Electric vehicle battery pack costs from technical studies and automaker statements. cell materials like cobalt, battery cell estimates indicate that battery pack below. These battery cost estimates, design to achieve greater energy costs will decline to $130–$160/kWh often reassessed by the same groups density, battery pack improvements by 2020–2022, and then to $120–$135/ with similar methods one or two years designed for further density improve- kWh by 2025. However, Tesla states it later, have trended lower each year. ments, and lower assembly costs that will reach $100/kWh by 2022, associ- Also, leading high-volume companies are the result of learning and much ated with its NCA-based battery pack will continue to have lower costs than greater production volume. In addition technology and based on its earlier the industry average values that are to the automaker statements by high-production volume. Berckmans applied in this analysis. Assessing the Volkswagen, General Motors, and Tesla et al. (2017) finds that even greater speed of the cost reduction with such noted in Table 1, the near-term techni- battery cost declines can be achieved dynamics, as the technology matures, cal report results are corroborated by with NMC cathode batteries, if the is difficult and uncertain. Therefore, a a survey of dozens of industry stake- anode can transition from the 2018- lower-cost battery pack assumption holders conducted by Bloomberg New dominant graphite to a silicon alloy that matches the lowest estimates in 2 Energy Finance (BNEF), as well as while overcoming cycle-life issues. the figure is applied for an additional direct public statements from auto- BNEF’s industry survey indicates the sensitivity case. makers. Nickel cobalt aluminum oxide volume-weighted average battery (NCA) batteries in 2018 tended to be pack cost is $176/kWh and indicates $100–$150 per kilowatt-hour (kWh), pack-level costs will decline to $62/ VEHICLE COST ANALYSIS kWh in 2030. compared to nickel manganese cobalt This vehicle cost analysis assesses oxide (NMC) batteries that are typical three light-duty passenger vehicles of other automakers and gener- In order to determine average battery that are defined to be representative ally produced at lower volumes for cost for our assessment, industry of three broad vehicle classes. The $150–$200/kWh. average battery costs of $128/kWh at the cell level and $176/kWh at the pack vehicles’ initial cost and their total cost Figure 2 shows findings from the level, which are assumed to be for a of ownership for the first owners of studies cited in the Table 1 notes to representative 45 kWh battery pack, the vehicles are analyzed. The three illustrate the likely range of battery are applied to costs for 2018. Matching vehicle classes are cars, crossovers, pack costs for 2020–2030. Several battery costs to the middle of the and sport utility vehicles (SUVs), which trends in Table 1 sources, and reducing are based on the sales-weighted tech- 2 Bloomberg New Energy Finance, “A Behind these costs by 7% per year, results in nical attributes from U.S. market model the Scenes Take on Lithium-ion Battery the battery pack-level costs—which year 2016 data, the latest complete Prices” (March 5, 2019), https://about.bnef. com/blog/behind-scenes-take-lithium-ion- vary by vehicle pack size—that are dataset for these vehicle classes’ price, battery-prices/ shown for various vehicles analyzed rated engine power, efficiency, and

WORKING PAPER 2019-06 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION 3 UPDATE ON ELECTRIC VEHICLE COSTS IN THE UNITED STATES THROUGH 2030

Table 2. Technical specifications for three analyzed vehicle classes.

Conventional Electric Plug-in hybrid Car SUV Car Crossover SUV Car Crossover SUV 2018 2030 2018 2030 2018 2030 2018 2030 2018 2030 2018 2030 2018 2030 2018 2030 2018 2030 Power (kW) 150 150 150 150 220 220 150 150 150 150 220 220 150 150 150 150 220 220 Fuel economy (mpg) 30 37 26 33 20 25 47 56 41 49 27 32 Short 150 150 150 150 150 150 Rangea (miles) Mid 200 200 200 200 200 200 50 50 50 50 50 50 Long 250 250 250 250 250 250

Electric Short 0.28 0.26 0.34 0.31 0.48 0.44 efficiency Mid 0.29 0.27 0.35 0.32 0.50 0.46 0.31 0.29 0.37 0.34 0.53 0.49 (kWh/mile) Long 0.30 0.28 0.36 0.33 0.51 0.47 Short 42 39 50 46 72 66 Battery pack Mid 58 54 69 64 99 92 15 14 19 17 27 25 (kWh) Long 75 69 90 83 128 119 Short 0.93 0.93 0.93 0.93 0.93 0.93 Utility factor Mid 0.95 0.95 0.95 0.95 0.95 0.95 0.69 0.69 0.69 0.69 0.69 0.69 Long 0.97 0.97 0.97 0.97 0.97 0.97 Short $177 $74 $175 $74 $175 $73 Pack cost Mid $175 $73 $175 $73 $167 $72 $210 $88 $210 $88 $200 $86 ($/kWh) Long $175 $73 $172 $73 $154 $64 Note. kW = kilowatt; mpg = miles per gallon gasoline; kWh = kilowatt-hour. Numbers are rounded. Vehicle efficiency and range are based on U.S. consumer label values. aFor range designations, short = BEV150, mid = BEV200 and PHEV50, long = BEV250. vehicle size.3 The crossovers include The primary focus of the study is on electric range. These utility factors station wagons and small SUVs,of fully battery electric vehicles (BEVs), range from 0.69 for 50-mile plug-in which approximately half are classi- although several equivalent calcula- electric hybrids up to 0.97 for 250-mile fied as passenger cars and half as light tions for plug-in hybrid electric vehicles electric vehicles,4 which is described for regulatory purposes. Based (PHEVs) with gasoline engines also are and applied in the evaluation of vehicle on the 2016 data, the three vehicle included in the evaluation. Because ownership costs below. classes represent 41%, 26%, and 22%, the electric vehicle market is expected respectively, of new U.S. light-duty to continue to include lower-cost, The initial 2018 electric vehicle effi- vehicle sales. The remaining 11% of the lower-range options and higher-cost, ciencies of these vehicles are based U.S. light-duty vehicle market is pickup higher-range options, this analysis directly on existing model year 2018 trucks, which are not analyzed in this includes 150-mile (BEV150), 200-mile electric vehicle models, accounting for report because of the lack of informa- (BEV200), and 250-mile (BEV250) increased -per-mile for lon- tion about applicable electric vehicle BEVs and a 50-mile PHEV (PHEV50). ger-range electric vehicles due to larger, components and specifications. The heavier battery packs.5 In addition, the comparable average conventional Table 2 shows the technical vehicle crossover vehicle efficiency accounts gasoline vehicle prices were about specifications for the conventional for the general difference in efficiency $29,000 for cars and crossovers and gasoline, electric, and plug-in hybrid from cars to crossovers and the cross- $41,000 for SUVs. vehicles for three vehicle classes in over having all-wheel drive. For the 2018 and 2030. The technical speci- SUV, the electric efficiency accounts fications include rated power in kilo- for the vehicle being a larger, heavier watts (kW), fuel economy in miles per gallon (mpg), electric range in miles, 3 Dataset from National Highway Traffic Safety Administration, “Compliance and Effects electric efficiency in kilowatt-hours per Modeling System” (2018), https://www. mile (kWh/mile), and battery pack size 4 For further information, see SAE International. Utility Factor Definitions for Plug-In Hybrid nhtsa.gov/corporate-average-fuel-economy/ in kilowatt-hours (kWh). Also appli- compliance-and-effects-modeling-system. Electric Vehicles Using Survey Data, Examples of representative models for cars cable for electric and plug-in hybrids is (J2841 2010-09), https://www.sae.org/ are Ford Fusion, Accord, Altima; the utility factor, which is the fraction standards/content/j2841_201009/ for crossovers, , Honda CR-V, of daily miles that could be powered 5 U.S. Department of Energy, “Download RAV4; and for SUVs, , fuel economy data” (2019), https://www. , and . electrically by the vehicles of the given fueleconomy.gov/feg/download.shtml

4 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION WORKING PAPER 2019-06 UPDATE ON ELECTRIC VEHICLE COSTS IN THE UNITED STATES THROUGH 2030

Table 3. Electric vehicle component costs from various studies.

UBS (2017) costs 2017 2025 How UBS costs are adapted to determine Gasoline Type Component electric electric electric vehicle costs for this analysis The UBS estimate shown here is for $133/kWh in 2025. This is updated to $104/kWh in 2025 and $72/kWh in 2030 for this Battery pack - $11,500 $8,000 analysis this by applying pack-level cost reduction of 7% per year based on research noted in the text.a Thermal management - $250 $225 Power distribution - $250 $295 module Electric Inverter/converter - $697 $523 vehicle Electric drive module - $1,200 $1,080 Electric powertrain costs are based on UBS component costs powertrain for cars and crossover vehicles (150 kW) and scaled up by DC converter - $150 $134 47% (220 kW versus 150 kW) for SUVs.b Controller - $51 $46 Control module - $93 $84 cables - $335 $302 On-board charger - $273 $205 Charging - $150 $135 Powertrain (engine, UBS costs are scaled up to reflect the higher power of U.S. Conventional , exhaust, $6,800 - - average cars and crossover vehicles by 18% (150 kW versus powertrain etc.) 127 kW) and SUVs by 74% (220 kW versus 127 kW)b For vehicle assembly, UBS costs are scaled up to account for the larger footprint of average U.S. vehicles: 6% for cars, Other direct Vehicle assembly $12,700 $12,600 $11,900 5% for crossovers, and 21% for SUVs.b This also includes the incremental costs of vehicle improvements needed to meet efficiency standards. Includes depreciation, amortization, Based on UBS, combustion vehicle indirect costs are fixed research and at 20.5% of direct costs. For electric vehicles, the same Indirect cost $4,000 $10,584 $3,200 development (R&D), proportional R&D indirect cost reduction over time that UBS and administration used for cars is assumed for all three vehicle classes. expenses a See Table 1 and Figure 2. Average $/kWh values shown, precise value by vehicle class and year differ by battery capacity b Average car and crossover (150 kW) and SUV (220 kW) power based on sales-weighted averages from U.S. model year 2016 data. See NHTSA: https://www.nhtsa.gov/corporate-average-fuel-economy/compliance-and-effects-modeling-system vehicle and having all-wheel drive and pack capacity is assumed,6 meaning and to $72/kWh in 2030. The SUV with towing capacity. larger battery packs (e.g., for 250-mile the largest pack size in 2030 has the range SUV) have lower per-kilowatt- lowest per-kilowatt-hour cost among The bottom three rows of Table 2 show hour pack costs. The resulting average these cases at $64/kWh. PHEV pack- the battery pack costs per kWh for pack-level costs across these BEV level costs are assumed to remain 20% 2018 and 2030. The resulting battery cases decline to $104/kWh in 2025, higher than those for BEVs throughout cell-level costs, averaged across the the time frame of the analysis. three BEV cases, are $78/kWh in 2025 and $56/kWh in 2030. A decreas- 6 The pack-to-cell ratios considered here range Table 3 summarizes electric vehicle from 1.54 for a 16 kWh pack down to 1.2 for 112 ing pack-to-cell ratio with increasing kWh and larger packs. See Michael Safoutin, component and vehicle-level costs 7 Joe McDonald, and Ben Ellies, “Predicting the from UBS, which are based on Future Manufacturing Cost of Batteries for a vehicle teardown study of the Plug-In Vehicles for the U.S. Environmental Protection Agency (EPA) 2017–2025 Light- Duty Greenhouse Gas Standards,” World 7 UBS, “UBS evidence lab teardown: Electric Vehicle Journal, 2018, 9 (3): 42, Disruption ahead?” (2017), https://neo.ubs. https://doi.org/10.3390/wevj9030042 com/shared/d1ZTxnvF2k/

WORKING PAPER 2019-06 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION 5 UPDATE ON ELECTRIC VEHICLE COSTS IN THE UNITED STATES THROUGH 2030

Indirect cost $50,000 Vehicle assembly Engine Engine auxiliaries $40,000 Transmission Exhaust Engine control unit $30,000 Charging cord On-board charger High voltage cables $20,000 Control module

Vehicle cost Controller DC converter $10,000 Electric drive module Inverter / converter Power distribution module $0 Thermal management Battery pack BEV15 0 BEV15 0 BEV15 0 BEV15 0 BEV15 0 BEV15 0 BEV25 0 BEV25 0 BEV25 0 BEV25 0 BEV25 0 BEV25 0 BEV200 BEV200 BEV200 BEV200 BEV200 BEV200 PHEV5 0 PHEV5 0 PHEV5 0 PHEV5 0 PHEV5 0 PHEV5 0 Conventional Conventional Conventional Conventional Conventional Conventional Car Crossover SUV Car Crossover SUV

2018 2025

Figure 3. Vehicle technology costs for conventional and electric vehicles in 2018 and 2025 for cars, crossovers, and SUVs.

Chevrolet Bolt with a 60 kWh battery reductions for electric vehicles each year from 2018 through 2030, pack and electric power output of 145 amount to a reduction from 66% of the upfront vehicle price increases by kW. The highest-cost electric vehicle direct non-battery vehicle costs in approximately 0.35% annually. component is the battery pack, which 2017 down to 21% in 2025. These declines from $11,500 to $8,000, electric vehicle indirect costs—which The applicable vehicle costs, including based on UBS’ estimate that the pack include research and development, conventional and electric vehicle tech- cost reaches $133/kWh by 2025. This depreciation, and amortized costs nology components, are illustrated in analysis relies on the UBS teardown from electric vehicle investments— Figure 3. As indicated, electric vehicle data, making several updates to incor- see substantial declines of about 70% costs in 2018 are substantially higher porate the latest battery cost data from 2017 to 2025 because those than conventional vehicle costs for and to adapt the UBS values for the costs are spread across greatly the three vehicle classes, by $8,000 crossover and SUV vehicle classes. increased electric vehicle production. for a short-range car to $21,000 for The key change to the UBS numbers a long-range SUV. By 2025, BEV is updating the battery pack cost to Several additional assumptions are costs approach the cost of a conven- reflect the latest previously mentioned included to incorporate other factors in tional vehicle that year, ranging from research, leading to an average pack the vehicle cost analysis. Increased fuel somewhat lower for a BEV150 car, cost in this analysis of $104/kWh in economy improvements for conven- crossover, and SUV up to about $3,700 2025. Explanations of how the UBS tional gasoline vehicles and associated higher for a BEV250 SUV. Although data are updated and adapted for this incremental price increases—$700 there are reductions in PHEV50 costs analysis are included in the rightmost for cars, $800 for crossovers, and by 2025, their overall cost is $4,900– column. For example, powertrain com- $1,000 for SUVs—are applied to meet $7,500 higher than their conventional ponents are scaled to vehicle power, expected vehicle efficiency regula- gasoline counterparts in 2025. vehicle-level manufacturing costs are tions through 2025.8 To incorporate scaled to the vehicle footprint, and these incremental cost increases for As shown in Figure 3, declining battery indirect costs are treated as a percent- costs account for much of the decline age of direct costs. 8 Nic Lutsey, Dan Meszler, Aaron Isenstadt, John in electric vehicle costs. For example, German, and Josh Miller, Efficiency technology the 200-mile electric crossover battery As indicated in Table 3, a major cost and cost assessment for U.S. 2025–2030 light- pack drops by more than 42% from duty vehicles (ICCT: Washington DC, 2017), reduction comes from the reduced http://www.theicct.org/US-2030-technology- more than $12,000 in 2018 to less indirect costs. UBS’ indirect cost cost-assessment than $7,000 in 2025, because of the

6 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION WORKING PAPER 2019-06 UPDATE ON ELECTRIC VEHICLE COSTS IN THE UNITED STATES THROUGH 2030

reduced battery cell cost, lower pack- BEV250 BEV200 BEV150 PHEV50 Conventional level assembly cost, and increased Car vehicle efficiency allowing for less $40,000 battery capacity. Indirect costs con- tribute an even larger amount of the overall reduction in cost for electric vehicles. Electric vehicles’ indirect $30,000 costs per vehicle—$9,000 for cars and crossovers, and $13,000 for SUVs— Vehicle price are much higher than those of con- ventional vehicles—$4,200 for cars, $20,000 $4,300 for crossovers, and $5,400 for 2020 2022 2024 2026 2028 2030 SUVs—in 2018. These electric vehicle $50,000 indirect costs drop largely because Crossover of the reduced R&D per vehicle over time. Many electric vehicle compo- $40,000 nents—especially the high-cost battery cells—are developed by a competi- tive supplier base, rather than directly $30,000 by automakers, so this continues a Vehicle price long-time trend toward more supplier content in vehicles. $20,000 2020 2022 2024 2026 2028 2030 Several other assumptions link the $60,000 vehicle costs in Table 3 to the price of the vehicle based on applicable indus- try-average dealer and profit markups. $50,000 Based on UBS,9 cars maintain a 15% dealer markup and have a 5% profit. $40,000 For the other two vehicle classes and across all technologies, the same 15% Vehicle price $30,000 markup for dealer incentives and marketing is assumed over time. The analysis applies a 15% profit for SUVs $20,000 2020 2022 2024 2026 2028 2030 and a 10% profit for crossovers, the midpoint between the car and SUV. This is done for consistency and to Figure 4. Initial purchase price of conventional vehicles and electric vehicles for cars, crossovers, and SUVs for 2020–2030. ensure electric vehicles have the same profit built in as the profit assumed gasoline vehicle (gray line), increas- for conventional vehicles. In addition, ELECTRIC VEHICLE PRICE PARITY ing incrementally as the average an 8.5% purchase tax is included for vehicle gets more efficient by adding all vehicles, approximately matching From the preceeding technical speci- powertrain and road-load efficiency the U.S. average. These assumptions fications of the vehicle technologies improvements. Each segment of the do not affect the timing of initial cost for the three vehicle classes, changing figure reflects the changing technol- parity attainment for electric vehicles vehicle prices are assessed through ogy costs for electric vehicles of dif- because they are taken as constant for 2030. As described, the evaluation ferent ranges (i.e., BEV150, BEV200, all the technology types. matches the technical specifications BEV250, PHEV50). of average U.S. market car, crossover, and SUV categories. Figure 4 shows Figure 4 shows that electric vehicles the vehicle technology prices for the will see substantial cost reductions car (top segment), crossover (middle), resulting from battery technology, scale 9 UBS, “UBS evidence lab electric car teardown: Disruption ahead?” (2017), https://neo.ubs. and SUV (bottom). Each segment improvements, and reduced indirect com/shared/d1ZTxnvF2k/ includes the average conventional costs from lower automaker research

WORKING PAPER 2019-06 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION 7 UPDATE ON ELECTRIC VEHICLE COSTS IN THE UNITED STATES THROUGH 2030

and development costs over the 2020– CONSUMER COST $0.065, and $0.094 per mile for the 2030 time frame. The 150-mile electric COMPETITIVENESS car, crossover, and SUV, respectively, vehicles achieve cost parity, crossing as well as BEV maintenance costs of the conventional vehicle line, sooner In addition to the question of initial $0.026, $0.029, and $0.39 per mile.12 than the longer-range electric vehicles. purchase price parity is the question of For the BEV150 vehicles, cost parity is when cost-competitiveness is experi- Several additional factors are applied to the ownership costs for electric met for the electric car in 2024, and in enced by an electric vehicle consumer vehicles. First, a home charger cost of 2025 for the crossover and SUV. The who owns and operates the vehicle for $1,300 for BEVs and $300 for PHEVs longer-range electric vehicles achieve several years. The prospective electric is included to enable more convenient parity later—in 2025 for the BEV200 vehicle driver’s cost-of-ownership residential charging. A utility factor is car, 2026 for the BEV200 crossover parity is analyzed by applying several applied to incorporate how BEVs and and SUV, 2027 for the BEV250 car additional average U.S. new vehicle PHEVs typically are driven for fewer and SUV, and 2028 for the BEV250 driver assumptions. The first owner of annual electric miles than typical new crossover. These later years for cost the vehicle is assumed to operate the vehicle annual driving averages. The parity are because the BEV200 and vehicle for 5 years, which is typical of utility factor estimates the average BEV250 vehicles’ larger battery packs vehicle ownership and vehicle leasing fraction of daily miles covered by add costs of $1,600–$3,300 for cars, terms in the United States. electric vehicles of the given electric $1,900–$3,900 for crossovers, and For analyzing vehicle energy expen- range (e.g., 0.69 for the PHEV50, $2,400–$4,100 for SUVs above the ditures, fuel and electricity prices are 0.93 for the BEV150, and 0.97 for the battery costs of the BEV150 by 2025. 13 taken from the U.S. Energy Information BEV250). The remaining miles (31% for the PHEV50, 7% for the BEV150, PHEV50s are also shown in Figure 4. Administration, where gasoline 3% for the BEV250) are therefore PHEVs see a reduction in cost differ- increases from $2.90 to $3.48 per expected to be covered by nonelectric ential versus conventional gasoline gallon from 2018 to 2035 and electric- driving. PHEVs are simply driven in vehicles by 2030, but there is no fore- ity increases from $0.12/kWh to $0.13/ 10 gasoline-powered charge-sustaining seeable initial cost parity point with kWh from 2018 to 2035. To assess hybrid mode for the remaining miles. conventional vehicles. The PHEV50 future-year fuel costs, a discount For BEVs, the nonelectric driving car price differential compared to rate of 5% for each year beyond would be by a “replacement” vehicle, conventional vehicles declines from the purchase year is included in net for example a separate vehicle in that present value accounting. For the $7,300 in 2020 to $4,900 in 2030. The household, a rental, or a ride-hailing annual travel activity, data are applied PHEV50 SUV price differential drops vehicle. For consistency for BEV from the Transportation Energy Data from $12,000 in 2020 to $8,000 in replacement miles, the total cost of Book.11 The new vehicle miles traveled 2030. There are two major reasons ownership values from combustion for cars start at 13,800 in the first that PHEVs, unlike BEVs, do not have vehicles from within this analysis are year and decrease to 12,700 by the a point of cost parity. First, the battery applied (per-mile costs of $0.63 for fifth year; for the SUVs, annual driving pack is a much lower contributor to the car, $0.66 for the crossover, and the PHEV price, so even dramatic drops from 16,000 in the first year to $0.75 for the SUV in 2018). battery cost reductions have less 14,500 in the fifth year. For crossovers, effect. Second, the PHEV retains the the average of these two trends is 12 Car values from UBS, “UBS evidence lab powertrain parts of the combustion applied. Conventional vehicle mainte- electric car teardown: Disruption ahead?” vehicle while also adding new electric nance costs are assumed to be $0.061, (2017), https://neo.ubs.com/shared/ d1ZTxnvF2k/. Crossover and SUV values components. As shown, PHEVs with are scaled up from cars, proportional significant electric range (in this case 10 U.S. Energy Information Administration, to manufacturing cost. PHEV per-mile Annual Energy Outlook 2019 (U.S. Department maintenance assumed to be the average of 50 miles) will remain more expensive of Energy, January 24, 2018), https://www.eia. conventional and BEV costs. than conventional vehicles, and the gov/outlooks/aeo/index.php 13 For further information, see SAE International, price advantage of BEVs over PHEVs 11 Oak Ridge National Laboratory, Transportation Utility Factor Definitions for Plug-In Hybrid Energy Data Book (Edition 36. August 31, Electric Vehicles Using Travel Survey Data, will grow substantially from about 2018), https://cta.ornl.gov/data/editions/ (J2841 2010-09), https://www.sae.org/ 2024 on. Edition36_Full_Doc.pdf standards/content/j2841_201009/

8 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION WORKING PAPER 2019-06 UPDATE ON ELECTRIC VEHICLE COSTS IN THE UNITED STATES THROUGH 2030

$80,000

Replacement $60,000 Tax Maintenance Fuel / electricity $40,000 Charging equipment Dealer mark-up $20,000 Profit margin Vehicle ownership cost Vehicle manufacturing cost $0 BEV15 0 BEV200 BEV25 0 BEV15 0 BEV200 BEV25 0 BEV15 0 BEV200 BEV25 0 BEV15 0 BEV200 BEV25 0 BEV15 0 BEV200 BEV25 0 BEV15 0 BEV200 BEV25 0 PHEV5 0 PHEV5 0 PHEV5 0 PHEV5 0 PHEV5 0 PHEV5 0 Conventional Conventional Conventional Conventional Conventional Conventional Car Crossover SUV Car Crossover SUV 2018 2025 Figure 5. Total vehicle ownership costs for conventional and electric vehicles in 2018 and 2025 for cars, crossovers, and SUVs.

Figure 5 illustrates manufacturing, cost savings, but have the additional A comparison of Figure 6 and Figure markup, charging, fueling, mainte- costs of charging equipment and a 4 shows that from a consumer own- nance, tax, and vehicle replacement replacement vehicle with which to ership perspective, electric vehicles costs. The figure shows the 5-year make up the forgone miles from its are an attractive proposition several ownership costs for the three vehicle shorter range. years before initial price parity. A classes, for conventional and electric major factor is the fuel savings associ- Figure 6 shows the total 5-year vehicle vehicles, in 2018 and 2025. The vehicle ated with electric vehicles, specifically ownership costs for the car (top manufacturing costs match those in the conventional vehicle fuel costs segment), crossover (middle), and Figure 3, but the addition of the other minus the electricity costs for BEVs. factors in the figure make overall BEV SUV (bottom). Each of the segments For example, the fuel cost savings for ownership costs lower than the con- includes the average conventional the first vehicle owner of the BEV200 ventional vehicle in seven of the nine gasoline vehicle (gray line), and the electric vehicle in 2025 are approx- BEV cases in 2025. After vehicle costs, ownership costs for the BEV150, imately $3,500 for cars, $3,900 for the most important factor affecting BEV200, BEV250, and PHEV50 crossovers, and $4,200 for SUVs the relative costs of the technologies vehicles for 2020–2030. As shown in compared to the average conventional is fuel savings. In 2025, the first-owner Figure 4 for vehicle cost, the dominant fuel cost for an average new car buyer feature is that the BEVs see sub- vehicle of that class. The shorter-range is $5,400 for gasoline, compared to stantial cost reductions from battery BEV150s reach first-owner parity about about $1,800–$2,000 in electricity technology and scale improvements. 1.5 years before the BEV200 and about for the electric vehicles using our net In addition, the BEVs see significant three years before the BEV250. PHEVs present value assumptions. For the fuel savings, which in turn make their see a substantially reduced owner- SUV, the average conventional vehicle ownership cost parity year with the ship cost differential with conventional consumes $8,100 in gasoline versus conventional vehicle occur from 1.4 to vehicles, by about half from 2020 to $3,600–$4,000 in electricity in 2025. 2.2 years sooner than their initial cost 2030, but they do not see cost parity BEVs also accrue relative maintenance parity year across the nine BEV cases. within that time frame.

WORKING PAPER 2019-06 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION 9 UPDATE ON ELECTRIC VEHICLE COSTS IN THE UNITED STATES THROUGH 2030

BEV250 BEV200 BEV150 PHEV50 Conventional preceding sections. The costs deter- mined in the lower-cost case more Car $50,000 closely match those of Bloomberg New Energy Finance (see footnote 2) and the Berckmans et al. (2017) silicon alloy anode case cited in the notes to $40,000 Table 1.

Ownership cost Figure 7 shows the year of cost parity based on initial vehicle cost $30,000 and first-owner total ownership costs 2020 2022 2024 2026 2028 2030 for the primary and low-cost cases. $60,000 The years for the lower-cost electric Crossover vehicle cases are shown as lighter color data points in the figure. The $50,000 lower battery cost generally moves the parity point with conventional combustion vehicles approximately $40,000 one year earlier, although the effect

Ownership cost differs by vehicle class and BEV range. The effect of battery cost reduction $30,000 on shortening the time required to 2020 2022 2024 2026 2028 2030 reach cost parity is greater for longer- $80,000 range crossovers and SUVs because Sport utility vehicle of their larger battery sizes. For initial $70,000 cost parity, the lower-cost scenario brings parity forward 1.2 years for the BEV250 crossover and just 0.4 years $60,000 for the BEV150 car. For first-owner total ownership costs, the lower-cost $50,000 Ownership cost case brings cost parity forward to a lesser extent; the average decrease in $40,000 the time needed to reach cost parity 2020 2022 2024 2026 2028 2030 across the nine vehicle types is 0.6- years, ranging from 0.9 years for the Ownership cost of conventional vehicles and electric vehicles for cars, Figure 6. BEV250 crossover to 0.2 years for the crossovers, and SUVs for 2020–2030. BEV150 car. CONSIDERATION OF battery costs would affect this assess- LOWER BATTERY COST ment regarding electric vehicle cost CONCLUSIONS parity. For the lower-cost case, a 9% Acknowledging that nearly every annual cost decline is applied instead This working paper synthesizes avail- study, including studies by the refer- of the central assumption above for a able technical data to analyze electric enced authors and by the ICCT’s own 7% per year battery cell cost reduction. vehicle costs for cars, crossovers, and previous analysis, have underpredicted This lower-cost case results in average SUVs through 2030. The work assesses battery cost reductions, a lower-cost battery pack-level costs of $89/kWh in the time frame for upfront vehicle cost sensitivity case is included as part of 2025 and $56/kWh in 2030, compared parity (based on initial costs) and first- this analysis. This low-cost case helps to $104/kWh in 2025 and $72/kWh owner cost competitiveness (based on in examining how further reductions in in 2030 in the primary analysis in the a first owner’s use with fuel savings)

10 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION WORKING PAPER 2019-06 UPDATE ON ELECTRIC VEHICLE COSTS IN THE UNITED STATES THROUGH 2030

First-owner total ownership parity (primary analysis) Initial cost parity (primary analysis) First-owner total ownership parity (lower-cost battery) Initial cost parity (lower-cost battery) BEV150 Car BEV200 BEV250 BEV150 Crossover BEV200 BEV250 BEV150 Sport utility vehicle BEV200 BEV250 2020 2022 2024 2026 2028 2030

Figure 7. Year of cost parity based on first-owner total cost of ownership and initial vehicle cost, shown for the primary analysis and a lower-cost battery scenario. for electric vehicles versus conven- of 200-mile electric vehicles realize require more electric models,15 a robust tional gasoline vehicles. The analysis fuel savings of $3,500 for cars, $3,900 charging infrastructure ecosystem to reveals two high-level findings. for crossovers, and $4,200 for SUVs, ensure convenience,16 and programs to 17 based on electricity costs typically inform consumers. Electric vehicle initial cost parity is being much lower than conventional coming within 5–10 years. As battery This analysis has several limitations. The vehicle gasoline expenses. pack costs drop to approximately work is focused on average cars, cross- overs, and SUVs without acknowledg- $104/kWh in 2025 and $72/kWh in Despite these positive findings, electric 2030, electric vehicle cost parity with ing heterogenous household vehicle vehicles achieving cost parity does not conventional vehicles is likely to occur needs. Technologies like plug-in electric ensure a complete transition to electric between 2024–2025 for shorter-range hybrids may still be attractive for par- mobility. Norway, for example, provides and 2026–2028 for longer-range ticular households, such as those with incentives to make electric vehicles electric vehicles. This applies to typical short commutes, frequent long-dis- 14 electric cars, crossovers, and SUVs. cost less than conventional vehicles. tance travel, and available home and If faster battery cost breakthroughs This has increased all-electric vehicle workplace charging. Also, this analysis to a further reduction in battery sales from nearly zero in 2012 to 30% does not address pickups, which rep- costs, for example to $89/kWh in of new vehicles in 2018. The relative resent 11% of the U.S. light-duty vehicle 2025 and $56/kWh in 2030, this will progress in Norway underscores the market. Electric technology now has bring electric vehicle initial cost parity importance of incentives. But it also migrated from cars to crossovers and forward by approximately one year. underscores the insufficiency of cost larger SUV models (e.g., e-tron, , , and parity to transition to an all-electric Cost-competitiveness for consumers market; if cost parity was the only approaches even faster than initial 15 Peter Slowik and Nic Lutsey, The continued critical barrier, markets with such com- transition to electric vehicles in U.S. cities cost parity based on fuel savings. pelling incentives would more rapidly (ICCT: Washington DC, 2018), https://www. Analysis of first-owner 5-year owner- theicct.org/publications/continued-EV- approach 100% electric. To com- ship costs indicates that an average transition-us-cities-2018 prehensively address the barriers to 16 Michael Nicholas, Dale Hall, and Nic Lutsey, new vehicle buyer will see an attractive adoption, policies can encourage or Quantifying the electric vehicle charging proposition to choose electric vehicles infrastructure gap across U.S. markets (ICCT: in the 2022–2026 time frame. The Washington DC, 2019), https://www.theicct. org/publications/charging-gap-US consumer ownership parity point for 14 Sandra Wappelhorst, Peter Mock, and Zifei Yang, Using vehicle taxation policy to 17 Kenneth Kurani, Nicolette Caperello, and each vehicle application is one to two lower emissions: An overview for Jennifer TyreeHageman, New Car Buyers’ years sooner than initial cost parity, passenger cars in Europe (ICCT: Washington Valuation of Zero-Emission Vehicles: DC, 2018), https://www.theicct.org/ (Institute of Transportation Studies, University due to the high fuel savings of electric publications/using-vehicle-taxation-policy- of California Davis, 2016), https://its.ucdavis. vehicles. For example, the first owners lower-transport-emissions edu/research/publications/

WORKING PAPER 2019-06 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION 11 UPDATE ON ELECTRIC VEHICLE COSTS IN THE UNITED STATES THROUGH 2030

many plug-in electric hybrids). Further battery volume. Nearly all of the Regulatory agencies have failed to migration into pickups with greater electric vehicles in the world—more acknowledge how quickly electric towing requirements has been slower, than 5 million through 2018—are in vehicles will reach cost parity with but electric pickup announcements markets with regulations that require conventional vehicles. U.S. regulatory continue from companies like Tesla, low-emission vehicles, offer incentives analysis, based on outdated data, indi- Ford, , and Workhorse. Improved of thousands of dollars per vehicle, cates that electric vehicle costs remain cost analysis of charging infrastruc- provide charging infrastructure, and dramatically higher than conventional ture is also important, and cost savings have complementary awareness cam- vehicle costs through 2025.18 Based on depend on policies that ensure elec- paigns. Automaker announcements the analysis provided herein, this is not tricity prices remain relatively low. of plans to increase electric vehicle the case. Similar analysis focused on production by an order of magni- markets around the world could, simi- The findings in this paper lead to tude by 2025 are largely consistent larly, reveal that the most up-to-date several policy implications. Battery costs, electric vehicle volume, and with this. Setbacks with regulations electric vehicle cost data could justify policy move in unison. The electric and incentives would slow progress, much stronger regulations. As the cost vehicle cost projections in this analysis whereas stronger regulatory policy in parity point is reached, governments are predicated upon sustained policy more markets around the world would can dramatically accelerate the shift that drives increased electric vehicle expedite the cost parity time frame to clean mobility with regulations that presented here. spur electric vehicle deployment.

18 The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021–2026 Passenger Cars and Light Trucks; Notice of Proposed Rulemaking, 49 Code of Federal Regulations (Vol 83, August 24, 2018).

12 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION WORKING PAPER 2019-06