Legacy automakers nationwide are making big public commitments to move away from conventional vehicles with internal combustion engines to electric vehicles. The federal government is further encouraging this change by way of provisions in the Infrastructure Investment and Jobs Act and Inflation Reduction Act. Some states are going even further; in August, California announced it will ban the sale of gasoline vehicles by 2035, and New York did the same a month later.
However, it remains to be seen if automakers will be able to successfully offer a wide-ranging EV lineup that successfully addresses the lion's share of the market. Currently, options are limited. Affluent buyers still dominate the EV market, with 43 percent of owners in the United States earning $150,000 or more, and 60 percent earning over $100,000.
The average EV now costs around $65,000. To make nationwide EV adoption a reality, the price of EVs must come down, and the solution lies within the battery.
Forty percent of the overall cost of an EV is tied to its battery pack. The availability of raw materials such as lithium and cobalt has combined with supply chain challenges to increase finished battery costs significantly over the past year, with no relief in sight.
The average cell-level cost of lithium ion batteries has soared to an estimated $160 per kilowatt-hour in 2022 from $105 in 2021. According to the Department of Energy's director of the vehicle technologies office, Dave Howell, that number needs to drop by more than 60 percent for EVs to reach cost parity with similar conventional vehicles.
As things currently stand, lithium ion battery prices are the biggest obstacle to widespread EV adoption and reduced tailpipe emissions. American automakers need to figure out how to reduce EV prices and increase production, and quickly.
A significant percentage of the world's lithium ion battery supply chain is currently controlled by China, and indications are that Chinese companies (many of them government-owned) are poised to become the primary supplier of low-cost EVs to the world, building an advantage that Detroit will find hard to overcome in the U.S.
The solution lies with alternative battery chemistries that avoid the use of lithium, cobalt, and other expensive metals in favor of more common, cheaper ones that can be readily sourced from a diverse range of free-trade partner countries. Diversifying the battery supply chain can yield cheaper batteries, and by extension, cheaper EVs. Chemistries that are inherently nonflammable can further reduce prices by minimizing manufacturer liability insurance costs, which are currently passed along to consumers as part of the total battery cost.
The clean energy transition must be equitable to become a reality. Alternative battery chemistries present this opportunity for our automakers, making EVs available to everyone, bolstering the American economy, and speeding our transition to net zero.