Lux Research, a Boston-based company, has projected that the cost of electric car battery will drop to as low as $172 kWh by 2025. As there is more and more technology companies are producing the lithium ion batteries in order to power up the electric vehicles. Between 2007 and 2014 itself, the cost of electric car battery has dropped more than half from initially, it was priced at $1000 per kWh to drop as long as $172 kWh.
Electric car battery, eventhough it seems like insignificant, but it has developed into a $33 billion global industry which generates about 100 gigawatt-hours of electricity per year. In the next 10 years, it is estimated that it can grow up to $50 billion and generate 160 gWh yearly.
Tesla Motors is one of the automakers which is pushing for electric car battery. The company started to make electric vehicles about 12 years ago and recently, Tesla has already manufactured a battery-powered car which can travel 200 miles on a single charge, Tesla Model S which a heavy price tag of $70,000.
Apart from the electric car battery, Tesla is also exploring on the battery for homes, Powerwall, and battery for businesses and utilities, Powerpacks. Unfortunately, Powerwall is priced from $3000 to $3500 with a capacity of 7 to 10 kWh, which makes home owners reluctant to use it. It is only when the price drops further then most probably more and more home owners are expected to subscribe to it. Powerpacks, on the other hand, seems to be more appealing to the larger companies.
The raw material of the battery which used by Tesla is about $69/kWh and the cost of the battery is estimated about 10-20% of the bill of material. Tesla currently paying Panasonic $180 kWh for their batteries while the conventional system are selling at $500 – $700 kWh. In the long term, it is expected that lithium-ion batteries could cost about $100 per kWh.