Why Is Battery Lifetime Becoming the Biggest Concern for Automakers?
As more and more Original Equipment Manufacturers (OEMs) and car makers start to produce EVs and invest in batteries, one of their main aims is to convince traditional car drivers that EVs are the way forward. To do this, they must be able to combine a long battery lifetime with a good performance, all while keeping the costs low and without the customer paying more. Why is improving and optimizing battery lifetime such an important aspect of cost reduction for OEMs?
The Rise of the EV
Since 2021, the sale of EVs has doubled to a new high of 6.6 million. In 2012, only 120,000 EVs were sold globally while last year, that amount was sold each week, representing almost 10% of global car sales and four times their market share in 2019. In 2021, there were approximately 16.5 million EVs on the world’s roads, triple the amount of 2018. This trend is continuing to grow this year with 2 million sold in the first quarter, an increase of 75% compared to the same period the previous year.
For these numbers to keep growing, OEMs must keep EVs appealing in other ways than their green potential. With how long the battery lasts a concern for potential adopters, improving and increasing battery lifetime is key to this. Indeed, OEMs understand how important those extra years are and for themselves, must also find a way to keep costs down.
Reducing the Cost of Ownership
When a consumer buys a product, a warranty covers it for a given amount of time. While most OEMs will have a five to eight-year warranty on their battery, US federal regulations require automakers to warranty batteries for eight years or 100,000 miles. Once this time or milestone is reached, any battery replacements are left in the hands of the consumer, resulting in them needing to change them at a cost. Indeed, if replacing the battery costs approximately $200 per kWh, up to $10,000 will be needed for a 40kWh. In the case of the Tesla Model S, it has a 95kWh battery, meaning around $19,000 would be required to change it. As a result, outside of warranty, EV battery replacement costs tend to range from $12,000 to $20,000. This can be problematic for consumers as this would impact the potential resale value when they look to sell the EV after the warranty has expired.
Worrying about Warranties
While current EV batteries are expected to last at least ten years, certain batteries can start to degrade during their warranty period. In the event that the battery loses capacity during this time, it will need to be replaced by the OEM, and this can be at a high cost. As such, car makers are increasingly focusing on EV lifetime, value and cost. Moreover, the better the battery, the less charging time will be required by the consumer and the cheaper the handling of the EV will be. Though this has yet to come up due to how recent most EVs still are, this could be a huge factor for OEMs at a later stage of the battery’s lifetime.
With more EVs on the road, this is turning into a great concern for automakers who would be under obligation to cover these costs during the warranty period. Therefore, battery improvements are crucial for car makers to convince them that switching to EVs is the way forward.
Reducing EV Lifetime Cost
With the costs associated with materials in the battery supply chain on the rise, reducing the battery cost to produce has become a priority for OEMs to keep a consumer-friendly price point available without compromising on results.
When looking at the price of a lithium-ion battery pack, it fell by 89% from more than $1,100/kWh in 2010 to $137/kWh in 2020. While the trend should have continued in this direction, current supply chain issues and material costs are threatening it to come to a halt and even be reversed. Indeed, due to geopolitical conflicts and investor speculation, essential battery materials including lithium, cobalt and nickel could all run on the lower side at the same time as metal prices rise. As a result, the cost to produce batteries has increased, which could affect the final price of the EV if OEMs want to keep their margins. Therefore, given the condition of current supply chains, automakers have understood that increasing battery lifetime will help keep overall costs down for consumers and for OEMs, as long as the batteries outlive their warranty.
The Longer Batteries Last, the Less OEMs Will Need to Worry
With looming costs to produce and high costs of ownership, OEMs are seeking new battery technologies that combine an extended battery lifetime with high performance and low costs. Indeed, EVs need to maintain a consumer-friendly price point along with giving consumers a long-term advantage to switch to electric.
Addionics’ new battery design is one of the leading technologies specializing in this as it prolongs the lifetime of the battery and is compatible with any battery chemistry. Furthermore, it’s cost-effective and enables a long driving range and fast charging. In terms of battery lifetime, the technology reduces internal resistance and improves heat dissipation by using a unique 3D electrodes structure, enabling a higher mechanical stability. Consequently, this slows battery degradation down and prolongs its lifetime while improving its safety.