Coming down the cost curve of lithium ion batteries.

It is difficult to imagine if and how our mobile devices would have looked and worked without lithium ion batteries. Just think of, give and take, the four times heavier and four times bigger lead acid batteries, with longer charging times and shorter life!

Looking ahead for large scale use of lithium batteries for vehicular and stationary applications, it is good to know that lithium batteries for the consumer electronics mass markets did not happen over-night. The fundamental R&D of lithium ion batteries took place in the 1970s and 80s. Sony Corporation initiated much of the commercialization of the lithium ion technology we now have in the batteries our laptops, tablets and cell phones. With the innovation of the Walkman Sony had recognized the need for a much better battery technology than the traditional primary (non rechargeable) lead acid batteries or rechargeable NiCad batteries.  Sony focused on taking the lithium ion technology from the laboratories to commercial products and became 1991 the first major consumer electronics company to launch rechargeable lithium ion batteries.

More than two decades have since passed.  Performance, life, reliability and costs have improved significantly. This progress has also helped to start making lithium ion batteries viable for vehicular and stationary applications, two potential mass markets. The question remains if the progress is enough to take it all the way to the mass markets.

The challenges are significant to go from consumer electronics to vehicular applications. A PEV (plug-in electric vehicle) the battery pack needs to store 50 kWh, give and take, of energy. (Tesla for its Model S offers three battery sizes: 40, 60 and 85 kWh.) It is about 1000 times more energy than what is in a laptop battery. Just the amount of energy raises the bar for safety. If that is not enough, the battery in a PEV needs to be able to discharge and charge much faster and much more frequently than in a laptop or cell phone. Technically these challenges have been solved by using different lithium ion chemistries and by designing more advanced battery packs, which include liquid-cooling. However, the solutions come with a higher cost.

Cost is the biggest challenge for mass scale adoption in automotive and stationary applications.  Presently the cost for a vehicular battery pack seems to be in the ballpark of 600 $/kW. (It is difficult to get precise numbers, since they are company confidential.) For a 50 kWh PEV battery it translates to $35 000. It has for some time been estimated for PEVs to reach mass markets the battery system cost needs to come down to 200 $/kWh, which would still mean $10 000.

Tesla recently announced plans for a “giga factory” with the goal of reducing the cost for the battery systems with 30 %. No question increasing production volumes will help reduce costs, but probably not as much as Tesla expects. 18650 battery cells are already in mass production for use in laptops and other applications! Production volumes are in the hundreds of million cells. Tesla targets for 2014 to ship 35 000 Model S. If all the cars will have the 85 kWh battery system, which has some 7100 battery cells, it adds up to 250 million cells. It is indeed a large number and some estimate that at that point Tesla will consume 40 % of all lithium ion 18650 cells. Nevertheless, Tesla will need to double production several times to get additional economy of scale. Thus it is difficult to see that even the giga factory will significantly reduce the cost for the 18650 cells. For the other costs in the Tesla battery pack the larger volumes of the Giga factory should result in a substantial cost reduction thanks to automation and tooling.

As a very rough rule of thumb for a vehicular application the battery cells are half the cost and the battery pack is the other half. Assuming that the cost reduction for the battery cells will be limited, the cost reduction of the battery pack will then need to be 60 % in order to bring the complete battery system down with 30 %! If achieved it will be a remarkable accomplishment.

But even if the 30 % cost reduction is achieved it would “only” take a battery system to about $400 per kWh. To reach $200 per kWh another 50 % reduction will be needed.

Just volume growth will not be enough to get the battery systems to the $200 per kWh target. In addition, and probably more important, will be new designs to improve the capacity of the cells with better lithium ion chemistries for the cathode and other material than presently used graphite for the anode.

Additional routes to reduce costs can be the format of the cells. As demonstrated for many products, e g by reciprocating engines and gas turbines, there is an economy of scale in the size! It is hard to imagine that the 18650 format is long-term the most cost efficient battery cell format for vehicular battery systems.

Eventually there should be opportunities to take costs out the manufacturing process, e g by going water-based instead of using solvents, which require costly environmental measures for VOC (volatile organic compounds) abatement and solvent recovery.

So back to the initial question: Are we there yet? The answer is No, but we are getting closer.

Lithium ion has not reached its limits yet, but for the final push to reach the desired costs other battery concepts may still be needed.