The Massachusetts Institute of Technology (MIT) Energy Initiative recently released a study with conclusions that could spell trouble for the electric vehicle (EV) market. According to the study, MIT found flaws in the theory that electric vehicles might end up at roughly the same price as traditional gasoline-powered cars within five years.
Titled “Mobility of the Future,” the report provides a detailed review of alternatives to internal-combustion engine vehicles, including hybrid gasoline-electric, plug-in hybrid electric, battery-electric, and hydrogen fuel cell electric vehicles. Even though the report predicts that we won’t see between gas and electric vehicles anytime soon, researchers did find that anywhere between 33% and 50% of passenger cars could be electric by 2050.
MIT’s cost analysis indicates that a midsize battery-electric vehicle with a range of 200-plus miles will likely remain upwards of $5,000 more expensive to manufacture than a similar internal-combustion vehicle through 2030. While lithium-ion batteries, which make up about a third of an EV’s cost, have been getting less expensive, that decline in price is likely going to slow down.
“If you follow some of these other projections, you basically end up with the cost of batteries being less than the ingredients required to make it,” said Randall Field, executive director of MIT’s Mobility of the Future group, in an interview with MIT Technology review. “We see that as a flaw.”
Currently, lithium-ion batteries cost anywhere from $175 to $300 per kilowatt-hour for a 60-kilowatt battery pack. The cost needs to come down to about $100 per kilowatt-hour to reach price parity with the internal-combustion engine.
However, reaching the $100 per kilowatt-hour magic number by 2030 would require costs for materials to remain the same over the next period — that’s not likely to happen considering the increased demand for lithium-ion batteries as demand grows for EVs in general. Although costs are expected to decrease, which will make an EV closer in price point to its gasoline or diesel-burning counterpart, it is widely thought that kilowatt-hour costs cannot get lower than $124.
With manufacturers getting behind the EV with billions of dollars of research and development, a new technology advancement either with lithium-ion or another alternative fuel source could skew the entire industry to price parity.
Correction 12/2: This article has been updated to better reflect the MIT report.