The cost of the battery in a Battery Electric Vehicle (BEV) currently represents a significant proportion of the overall vehicle cost. If we select the Nissan Leaf in the UK as an example, the base trim 40kWh 2019 model has a manufacturer suggested retail price (MSRP) of USD40,000 prior to subsidies. It’s impossible to know precisely how much Nissan is paying for the 40kWh pack, but our 2019 industry average estimate would be in the range of USD250/kWh. Which allocates USD10,000 of the overall vehicle cost then for the pack. That’s 25% of the MSRP attributable to the pack. According to powertrain experts from IHS Markit, if the entire cost of the powertrain is factored in—including motors, power electronics and software —then a figure of around 35% of total MSRP of the UK specification Leaf is attributable to the ‘Powertrain’.
Regionalities aside, these costs have resulted in BEVs being priced at considerably higher levels than traditional internal combustion engines (ICE), despite the relative simplicity of the battery/motor powertrain in comparison to a modern ICE. However, this scenario is fluid and changing and as battery technology evolves and capacity to produce increases, the cost per kWh to the point at which a BEV hits pricing parity with ICE technology is closing.
Yet whether parity is the factor preventing the wholesale shift to BEVs is questionable even today and also remains highly dependent on regional market factors. After taking into account the many different government subsidies, parity can have a significant impact when integrated into a wider set of supportive policy, such as in the Norwegian market. In the UK, where Renault markets a B-segment Clio and Zoe at close to parity (after £5k government subsidy) the Clio still far outsells the Zoe BEV by 10 to 1 (Clio 20k units, versus Zoe 2k units sold in calendar year 2018) which shows that with the current technology paradigm and infrastructure provision, the longstanding objections of range anxiety, and ease of charging remain significant obstacles in consumers’ minds.
Equally important to outright costs is the ‘convenience factor’ and ease of use. Changing consumer behavior by requiring an apparent step-back in convenience requires a psychology shift. This we feel, is more profound than overcoming the pricing hurdle. So even if total cost of ownership (TCO) and range objections can be fully countered, asking the end vehicle user to alter their behavior in order to accommodate a re-charge time to full range of over 10 minutes means there is still work to do.