Thinking about electric vehicles lately has me recalling Humphrey Bogart's legendary goodbye scene in Casablanca.
EVs are coming. Maybe not today, maybe not tomorrow. But soon and for the rest of our lives.
Electric cars continue to be uneconomical both at the powertrain level and the platform level, but that is changing profoundly.
The rule of thumb is that if battery packs' cost can come down to $100 per kilowatt-hour, then EVs will be cost competitive — at parity — with those powered by gasoline-burning internal-combustion engines.
A study by consulting firm AlixPartners estimates the cost of battery packs on average fell about 10 percent over the past year to $160. The gains have consistently been "better than logarithmic," said Mark Wakefield, global co-leader of the firm's automotive and industrial practice.
"It's not quite Moore's law," he said, referring to the notion that computing power roughly doubles every two years, "but it's very impressive."
Advances in chemistry and industrialization, AlixPartners projects, should cut battery costs to $100 by 2026. That's only about one product cycle away.
And that's the average — some will be ahead of that. General Motors has said its next-generation batteries, called Ultium, will crack the $100 price at the cell level as part of its five-year EV plan. Anticipation is high that Tesla is poised to announce some kind of breakthrough.
Automakers face another big challenge, though: scale. AlixPartners showed that the average platform for vehicles powered by internal-combustion engines typically tops 200,000 vehicles made on it each year. (It's projected to dip below that this year and next, though, because of the recession.) But for EV platforms, it's a mere 26,000 this year and projected to rise to only 86,000 by 2027.