Electric vehicle batteries lie at the heart of a revolution that will see the majority of the diesel and petrol-powered cars on the road being replaced with zero-emission electric cars. Unlike internal combustion engines, which require fossil fuels to run, EV batteries can be recharged with electricity, eliminating the need for fossil fuels and reducing tailpipe emissions to zero.
Sourcing raw materials and manufacturing EV batteries is incredibly costly, however. With the battery accounting for most of an EV’s cost, expensive batteries have pushed up overall EV prices and limited EV ownership to high-earning individuals with plenty of disposable income. Fortunately, EV batteries have been getting cleaner and more affordable over the past few years, thanks to innovations in the battery manufacturing space.
Conventional EV batteries require metals such as nickel, lithium, cobalt, aluminum and manganese. While sourcing aluminum isn’t quite costly, mining and processing the other metals is extremely resource intensive and is almost entirely reliant on Chinese companies. Lawmakers in Western nations such as the United States and European Union member states have made significant investments in domestic battery production to wean themselves off of China and fortify their supply chains.
EV battery energy density has doubled every 12 years while prices have dropped 50% every five years, meaning electric vehicle batteries are now cheaper and more energy dense than they were at the inception of the EV industry. By 2030, battery manufacturers will be able to double energy capacity and cut prices by another 50% while maintaining EV battery weight or half the weight and cutting prices by a quarter at the same energy density.
At the moment, the most energy-dense EV batteries are limited to expensive luxury EVs that are out of the reach of most of the market. But as costs reduce and energy density increases over the next two to four years, we can expect small cars that are popular in Asia and Europe to be equipped with large and affordable batteries.
Constant innovation in battery technology has also resulted in the development of faster charging and safer battery designs that require less rare raw materials, such as cobalt. The elimination of such raw materials will bring EV battery manufacturing costs down and producers can pass these savings down to consumers.
Despite initial doubts, the global battery manufacturing sector has also managed to scale up production to meet the increasing demand for electric vehicle batteries. Even though a supply shortfall is indeed on the horizon, the sector can continue to meet market demand if it expedites the process of opening new mines and expands its processing capacity.
And as EV makers such as Nikola Corporation (NASDAQ: NKLA) work these novel batteries into the models they bring to market, there is likely to be a commensurate increase in EV adoption as motorists’ concerns about cost and range issues no longer exist.
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