Electric Car Battery Cost

            Electric car battery costs have never been revealed to the public—until now.    According to an April 18 Wall Street Journal article by Mike Ramsey, entitled Ford CEO:  Battery is Third of Electric Car Cost, the CEO of Ford Motor Company, speaking at Fortune Magazine’s Brainstorm Green conference, said that the battery pack for an electric Ford Focus costs between $12,000 and $15,000.   He said, “When you move to an all electric vehicle, the battery size moves up to around 23 kilowatt hours, and it weighs around 600 to 700 pounds.  They’re around $12,000 to $15,000 [per battery] for a type of car that normally sells for about $22,000, [referring to the price of the gas powered Focus] so you can see why the economics are what they are.”

            Since the electric Focus sells for $39,200, the battery cost alone accounts for a third of the cost of the car.  The all electric Nissan Leaf price starts at $35,000, and the Chevy Volt, a plug-in hybrid, sells for about $40,000.   But at these prices, none of these cars will achieve much market penetration. The plug-in hybrid and the full electric car will remain niche products until the price of batteries comes down. That’s both good news and bad news.  It’s bad news because this means it’s unlikely that we will see much action in electric cars in the next year or two.  But it’s good news in that, though the price of batteries has to drop, it does not have to drop by orders of magnitudes.  The present price is about five or six hundred bucks per kilowatt hour of capacity.  If they could just get it down to about a third of that figure, I think we’d be home free.

            The Dept of Energy, which is subsidizing the building of battery factories, hopes to bring the price down to $300 /kwh by next year. They apparently feel that this figure would be a tipping point, and it might be.   Part of the high cost of the electric Focus is that even though they build this car on the same production line that builds the regular Focus, they make so few of them that they have all of the cost disadvantages of a “limited edition, handmade car.”  But if falling battery price were to allow them to drop the price to $32,000, then the radical increase in sales would allow sufficient economies of scale to drop the price by another $10,000, and this would place it in the price range of the cheap family car.  Remember, as rising gas prices create a market demand for non-petroleum cars, it is probably not the Cadillac buyers who really worry about the price of gas.  The natural market for electric cars is with people who feel they can’t afford to pay $4.00/gal for gas.  But if you can’t afford four dollar gas, then you probably can’t afford a $40,000 car.  But if the cost of these high tech batteries follows the same trajectory as other high tech electrical equipment, we may expect, over time, to see sharp decreases in price, once the market expands.

            When we get to the point that the typical new Ford sold is an electric vehicle, we will have traveled full circle to where Henry Ford wanted to go in the first place.  The gasoline powered cars that Henry put on the market were not his first choice in propulsion systems. Since Henry had been a supervisor of a power house before he went into the car business, an electric car would have been his first choice. But at that time, the available batteries were not up to the task. At one point, Ford hired Thomas Edison’s company to develop a better battery, but the best Edison could come up with, an advanced NiCad, could still not store sufficient energy per pound.  But today, we have the right battery.  And soon, we will have it at the right price.

             So; when will the electric car begin to change your life?   It already has.   Or, to be more precise, the “threat” of the electric car has changed your life.   For many decades, Detroit was content to offer us the same old V-8 engines and three speed transmissions. Product development was all about different styles of fins, and a little more chrome. But that was then and this is now. The modern, front-wheel-drive, four cylinder car delivers efficiency beyond anything we imagined 20 years ago.   In WWII, the “holy grail” of engine design was to build an engine that could deliver one horsepower per cubic inch of displacement.  And only the P-51 Mustang ever achieved this standard, and it did it with a supercharged engine with compression so high that it ran on 150 octane fuel.   In 2003, I bought a new Ford Focus with a 100 cubic inch engine which was rated at 120 hp.  This is a small in-line 4-cylinder engine, with no supercharger, that runs on regular gas, and was available in Ford’s cheapest cars.

             And yesterday, I traded in my 1995 Ford Escort for a new Ford Focus. Even with 287,000 miles on it, the Escort still runs fine, and I received a decent trade-in allowance on it. (And since I was trading in a Ford on another Ford, I got a Ford buyers loyalty bonus.)  In all the 17 years I’ve driven the Escort, I’ve done very little to it other than put gas and oil in it. It’s never had the head off, and other than totally rebuilding the brakes at 200,000 miles, no major mechanical work has ever been done. It even has the original exhaust system.  My only complaint was that it had only very modest amounts of acceleration.  (I don’t remember what it would do from zero to 60, but in measuring this, you don’t actually use a stop-watch—you use a calendar.)

            But the new Focus I just bought, with its little 2 liter engine, delivers 160 hp.   And with a six-speed automatic transmission, it has acceleration adequate for anyone except a maniac. I pulled onto the freeway entrance ramp from a dead stop, and was doing 70 when I got off the ramp and merged into the traffic.)  For me, that’s good enough.  And yet this thing has an EPA fuel rating of 37 mpg average, and maximum highway mileage up to 44mpg.  And this is a comfortable, four-door family car.  What I’m trying to say--is that American cars have gotten better—radically better.  That means that Detroit has actually spent serious money improving engine efficiency.   Why did they finally do this?  They looked in their rear view mirror, and what they saw creeping up behind them was the electric car.  And it scared the hell out of them.