Electric vehicles (EV) batteries are the primary reason electric cars are still so expensive in 2022. Although companies like Tesla have made significant headway in developing efficient lithium-ion batteries, they are still not quite affordable.
So, why are they so costly in this era of advanced technology?
We considered a few factors and noted that electric batteries are primarily expensive due to their costly components. Chemicals like lithium, cobalt, and nickel used in the cathode are rare and very expensive. Other factors such as manufacturing costs, trade barriers, little competition, and expensive technology also contribute to the high battery prices.
In this article, we will look at these reasons extensively and try to deduce whether the prices will ever come down.
How Much Do Electric Car Batteries Cost?
At the current pack sizes and rates, the average electric car battery costs around $7500. Of course, the prices vary between manufacturers and capacities.
Even so, the average pack unit price is currently at $156 per kilowatt/hour. This is a massive improvement from 2010 when the pack price was around $1183 per kilowatt/hour.
However, this is still higher than the $100 per kWh it would take to be at par with combustion engines.
Electric car battery replacements are even more expensive. For instance, Tesla required Tyler from Hoovie’s Garage to pay $22,500 to replace his Model S’ battery pack. This is almost a third of the car’s MSRP!
Why are EV Batteries So Expensive?
There are several reasons why electric car batteries are so expensive. Let’s look at some of them.
EV batteries require costly chemicals and materials to build. A typical EV uses the same type of rechargeable lithium-ion batteries you find in your phone or laptop, and those aren’t cheap. These tiny cells are grouped in packs resembling suitcases.
The most expensive component in these battery packs is the cathode, one of the two electrolytes that help store and release energy.
Materials used to make cathodes need to hold more energy and are often rare and expensive. These include lithium, cobalt, nickel, and manganese. All these elements need to be mined and processed into pure chemical compounds.
Huge Investments in Cutting Edge Technology
EV companies like Tesla have invested billions into battery R&D. The current EV batteries are fairly high technology, made with cutting edge design and engineering.
However, even though a lot of progress has been made in improving these batteries, there’s still a long way to go before they are reliable enough to phase out combustion engines.
As a result, EV battery manufacturers have to keep the prices high to maintain research and development funding.
Although Tesla and Nissan are actively trying to sell EVs, most big car manufacturers are only talking about electric vehicles.
Therefore, there’s little competition in the EV battery market, allowing the few companies in the sector to set the prices.
For instance, if you have a Tesla that needs a battery in the US, your only choice is to get it from Tesla themselves. As a result, they can charge you whatever they decide.
If big manufacturers like GM decided to make EVs, there’d be much-needed competition, inevitably dropping the prices.
High Manufacturing Costs
Although EV battery technology has rapidly evolved in the past decade, the manufacturing process is still not mature. Most EV startups don’t even have a battery plant and rely on independent manufacturers.
Tesla, the leading EV battery manufacturer, just started operating in its Gigafactory, which will help ramp up lithium-ion battery manufacturing. However, batteries are likely to continue to be expensive until Tesla recoups its capital.
More companies are also looking into developing similar infrastructure, but the prices will remain high until enough big factories are producing lithium-ion batteries.
Trade Barriers and Market Dynamics
The US and China have not been on the best economic relations for the past half-decade. This has affected the EV industry, considering that China is responsible for about 80% of chemical refining that converts cobalt, lithium, and other raw materials used as EV battery ingredients.
It has been difficult for American battery companies to source the chemicals from China in the middle of a trade war.
Covid 19 also made a bad situation worse. There was a lockdown in China for most of 2019 and 2020, cutting the supply of those essential chemicals. This created an ongoing EV battery shortage.
How Much Does It Cost to Charge an Electric Car Battery?
The cost of charging your EV battery will depend on several factors, including:
The engine’s efficiency in kilowatt-hour per mile.
The number of miles driven each month.
Even then, other things could affect the cost of charging a battery at home. However, the national residential average is 13.75 cents per kilowatt-hour.
This will roughly translate to around $50-$60 per month and around $650 per year. The amount could be higher or lower depending on car usage and the other aforementioned factors.
At a Charging Station
Nowadays, most EVs have a battery range longer than 200 miles. As a result, it will cost you anywhere between $10 and $30 to charge it fully at a charging station.
This will also depend on your car’s model and the type of charger you’re using.
For more accurate results, I would recommend using this calculator to ascertain the actual cost of charging your electric vehicle.
Electric Car Battery Lifespan
Electric car batteries have come a long way. In 2012, they could hardly last three years before developing complications. However, a decade later, you can expect your EV battery to give you 10 to 20 years of service.
But nothing made by humans is perfect. So, if not well taken care of, your battery may never see the 10-year mark.
Electric Car Battery Replacement Cost
Replacing an electric battery is still very expensive. In most cases, you’ll have to go back to your car’s manufacturer to get a new battery pack.
For instance, replacing a BMW i3’s 22kwhr battery would cost about $16,000, while any Tesla battery replacement will set you back at least $20,000.
Will The Prices Ever Come Down?
Fortunately, there’s a light at the end of the tunnel. EV battery companies have been working towards releasing commercial solid-state lithium-ion batteries. These will not only be cheaper but also more durable.
Additionally, traditional car manufacturers are set to join the EV industry within the next decade. With their massive infrastructure, they’ll be able to ramp up production and introduce competition.
Eventually, battery prices will have to come down just like we’ve witnessed in other technological sectors.
Where to Buy Electric Car Batteries
Although there are a few third-party electric car battery vendors, for now, it’s safest to buy your battery from your car’s manufacturer. They might be expensive, but at least their quality and safety are proven.