Cheap batteries won’t fuel demand for electric cars

Last week, I wrote about the wisdom behind government incentives for electric vehicles. I argued that such rebates are as much about reducing ownership costs as they are about policy direction.

Allow me to linger on the EV issue for another column.

A recent report put out by Bloomberg New Energy Finance (BNEF) projects that EVs will be cheaper than regular cars by 2022.

How? Lower cost of batteries — primarily.

The study says that the cost of lithium-ion batteries, arguably the biggest factor in EV pricing, has dropped by 65 per cent from 2010 to $350 per kWh in 2015. If all goes well, that might go as low as $120 per kWh by 2030.

The report also forecasts that by 2040, 35 per cent of all global new car sales will be EVs (I assume this implies that volumes will be higher in western economies such as Canada than in other nations).

For the sake of fairness, the numbers do rely on the fact that oil prices will climb back up to the $50-$60 (U.S.) mark by 2020, making gas more expensive and thereby tipping the cost of ownership scales in favour of EVs.

Yes, batteries will get cheaper in the future, but so will EVs. As more money is spent on research and development to lower the cost of batteries, the price of such vehicles will go down.

But will cheaper EVs necessarily drive mass adoption? To a certain extent, yes, but there are pitfalls in making a direct correlation to dropping prices and increasing ownership.

Charging time, charging infrastructure and range anxiety will continue to be equally big factors for potential owners. Of course, all of these will improve, but their development rates may still hinder adoption.

Areas such as Ontario and B.C. are well on their way to getting a denser network of charging stations, and I think infrastructure — at least in western economies — will be the easiest challenge to solve.

Battery ranges are getting better too. “Mass market” EVs such as the Nissan Leaf have ranges of up to 170 kilometres on a full charge. The upcoming Chevy Bolt will be better at 320 kilometres. But these are estimates based on perfect conditions. The “real” range tends to be a lot lower, particularly in colder climates like ours. A 200-250 kilometre range is great for city driving but what about longer distances? Even if there are an abundance of charging stations, let’s say, along the 401corridor between Toronto and Windsor, would you be willing to spend more than a minute on recharging? Wouldn’t you have to consider a good old internal combustion rental for longer distances, and what would that do to your cost of ownership?

I strongly believe that of all the adoption factors, charge time will be the biggest stumbling block. Tesla superchargers do provide a suffi- cient charge in about 30 minutes. Some DC chargers can get you 100 kilometres worth of juice in about 10-15 minutes, but those machines are still too expensive, and they won’t get a lot cheaper for a while. That’s not good enough. Consumers might be willing to pay lower or higher prices for a service or product, but they rarely compromise on convenience. It’s unlikely that they’ll make an exception for EVs.

So does this all mean that new car sales won’t turn all green in the 2020s? Absolutely not.

But it’ll likely be a lighter shade of the colour than we expect. Kumar Saha is a Toronto-based automotive analyst with the global research firm Frost & Sullivan. To reach him, send an email to wheels@thestar.ca and put his name in the subject line.

Charging time and range anxiety will still be equally big factors for potential owners of electric cars