Keeping the faith amid the first EV price war

  • 18-Jun-2013 09:01 EDT
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SAE Senior Editor Lindsay Brooke

The world isn’t exactly beating a path to electric passenger vehicles, as engineers working on those programs are painfully aware. As the second half of 2013 begins, consider the following news items from June:

• A survey of German drivers by the ADAC automobile association showed that they are becoming increasingly skeptical about EVs and that their expectations of the technology had been reduced significantly.

• Recent launches of Ford’s Focus EV and the Honda Fit EV would be termed disasters based on their first-year sales rates, if the cars were conventionally powered mainstream products.

General Motors slapped aggressive new deals of up to $4000 on its Chevrolet Volt to try to charge-up sales. In similar moves, Fiat, Nissan, Mitsubishi, and Toyota slashed prices and juiced up their incentives in what has become the first price war of the modern EV era.

• Chevy jumped in with bargain-basement pricing on its 2014 Spark EV directly at launch, prompting a GM truck engineer to quip, “Thankfully, Silverado sales are strong.”

• Daimler is reviewing options for its Li-Tec battery-cell joint venture with Evonik. Sale of the venture would underscore the slow demand for EVs.

Despite generous subsidies and media exposure, sales of electric cars in the U.S. and Europe remain far below expectations. Among the many factors continuing to suppress them is the industry’s success in wringing greater efficiency out of gas-powered cars and trucks, and hybrids.

As Steve Poulos, GM’s Global Chief Engineer for vehicle electrification systems, commented to me recently, “Once you own a vehicle that gets 50 mpg, it feels like it’s almost free. At 50 mpg I don’t think most people care what the powertrain is.”

So, the more efficient combustion-engined vehicles become, the tougher it will be for EV penetration to grow without purchase subsidies. The early adopters among the EV fan base have already bought their electric cars. Now it’s up to the market and good old competition to drive sales into the mainstream. That’s no simple task.

Keep in mind the OEMs will build zero-emission vehicles because they need them for regulatory compliance. For the short term at least they’ll have to slug it out in the pricing battle by continuing to subsidize development, while squeezing a lot more cost out of EV components and systems. Unfortunately, batteries remain the major stumbling block toward significantly lower system costs.

In 1992, the U.S. Advanced Battery Consortium set a cost target of $150/kW·h for lithium-ion, to be achieved over a 10-year period. Twenty-one years later, huge advancements have brought down Li-ion battery cost precipitously, but it’s not close to the $150/kW·h bogey. Instead, the average cost is currently around $700/kW·h, engineers tell me. They say the industry needs to be at $250/kW·h or less—a factor-of-three cost reduction—if EVs and hybrids are to become cost-competitive with conventional vehicles.

For engineers and researchers, the pressure is on—not the least of it coming from those pesky ICE guys, who have more improvements up their sleeves.

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