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All you need to know about making EV battery packs

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BatPacC – all you need to know about making EV battery packs

Our last article on batteries was intended to draw attention to the cost differential between residential storage and electric vehicle storage. Residential storage costs around A$1700-$1900 per usable KWh (kilowatt hour) whereas EV storage costs less than $400/KWh of effective capacity.

batpac1

What’s still left unanswered are the reasons for these differences. Still in this note we do no more than look at some of the components of the EV battery costs using the downloadable spread sheet from Argonne Labs Batpac C.

According to Argonne, this model was created in 2012 and represents the only “free” model of a lithium battery cost. The program costs out a factory including labour and other direct and indirect overheads, the costs of raw materials and other costs including depreciation and profit to derive EV battery pack costs.

In our view the results from the late 2015 update conform quite closely to what Tesla and GM are reporting in respect of the Model 3 and the Chevy Bolt. Particularly with Tesla having just offered tours of Stage 1 of its Reno Giga factory, it seems worthwhile reviewing battery pack costs. See this link Quarz’s tour of the Gigafactory for a uptodate review.


batpac 2

 

The first point to note is that the software only calculates costs up to the OEM [original equipment manufacturer] level. It doesn’t cost transport, installation, distribution, inverter or a bunch of other costs relevant to the stationary energy market.

Materials are the largest component of costs

batpac3

Materials are 40% of cost. Direct and indirect labour are just 10% of cost, which is one reason why the Tesla factory can be built in Nevada, close enough to where the cars will be assembled. The US$214 total is higher than Tesla and GM but within the ball park. Depreciation is based on US$300 m of investment (for land & buildings about $100m, factory equipment of US$180 m and working capital).

US manufacturers might hope to get some State Govt. assistance with the land and even factory cost. In any event it’s a non cash cost once committed. Frankly, a number of the cost items below would be ignored by some companies in setting both price and measuring cost. R&D for instance might be regarded as sunk investment.
batpac4

Despite the fact that nickel and cobalt are more expensive than some other materials, according to the authors of Batpac C, a variation in the chemistry won’t change the cost of the pack by more than 10%.

BATPAC5

Batteries could certainly alter the price of commodities

If we just focus on EV battery demand only and put to one side for the moment the potentially larger still stationary energy market we can still see EVs eventually having a major impact on the demand for cobalt, nickel, lithium, and graphite. My calculations, not as reliable as those of Fermi to be sure, , are as follows

Screen Shot 2016-08-10 at 11.41.46 AM
Argonne states for instance that there is 1.1 KG of graphite per KWh of EV battery capacity. So that is 66 Kg per EV, and for 0.5 m EVs per year that’s 33 m Kg. There is 1000 Kg per metric tonne and so 33 kt of graphite demand in that case. Graphite is sourced mainly from China at present, and can be naturally occurring or man made (from petroleum coke)

According to our estimates the current global demand for the key commodities for all purposes is:

Screen Shot 2016-08-10 at 11.43.43 AM

However, note that we have not distinguished between the fully refined and semi refined commodity. There are various grades and alloys that give different answers of global demand. As stated nor have we considered wastage, or potential demand from stationary energy.

Although the demand supply and prices of commodities is important to share market the first point here is that provided the supply is actually available the battery maker is not that sensitive to the price of the commodity.

The second point though is that supply will need to expand, or different chemistries will have to be found, because EVs are to fully replace oil powered passenger vehicles.

David Leitch is principal of ITK. He was  formerly a Utility Analyst for leading investment banks over the past 30 years. The views expressed are his own. Please note our new section, Energy Markets, which will include analysis from Leitch on the energy markets and broader energy issues. And also note our live generation widget, and the APVI solar contribution.  

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  • suthnsun

    Excellent distillation of information! The assumption of 60KWh per vehicle is very sumptuous (extravagant?) and does appear to match expectations. The world can’t afford that, if we don’t get to grips with reality very soon our demise will be very soon.

    • Brunel

      Yes. Battery swapping is the way to go. Mr Shai Agassi was always correct – but he did not have the deep pockets to do a Tesla.

  • George Michaelson

    Worldwide supplies of raw materials are a function both of natural supply limits, and capital investment. Few substances are actually mined at sufficient intensity to risk depleting what we understand to be their natural supply level. Most of them are mined at intensities which reflect the cost of capital and the size of the market.

    We have a nickel smelter here in Queensland who is going under, because he owns a plant built to a process tied to source from Noumea which is more costly to smelt than other sources. Its not a supply shortage per se: its the cost of the process. If the size of the worldwide market for nickel rises, the price will rise, and they will ramp up production, as will others. Lithium is not in short supply. I do not believe the fundamentals behind the input costs have explored anything like the cost of production, as much as the current costs of sourcing these things from a worldwide market tuned to a different scale of consumption.

    If you consider the price of oil when cars were invented, compared to now… And suggested we’d invent engines which flung burnt oil out the back of a turbine along with hot air, to propel people through the sky, at sufficiently low prices to be affordable by working class people.. I think even H.G. Wells might have smiled.

    Speculative hoarding, Strategic withholding (coltan?) and stockpiling, And then followed by increased exploration, speculative mine opening, re-opening, tailings dams re-visits, can all be expected shortly.

    Pure graphite.. I believe there is a long story about the nine-ninths pure graphite needed for the nuke industry. I have little doubt that given a market, the people who used to make this for class=1 reactors will tool up to make it for batteries.

  • juxx0r

    God it makes for painful reading when the author cant stick to proper SI conventions. It makes it doubly hard when he chops and changes, even within the one sentence: “there is 1.1 KG of graphite per KWh of EV battery capacity. So that is 66 Kg per EV,”

    Way too many Kelvins for me.

    • David leitch

      🙂

      • juxx0r

        Exhibit A

  • Brunel

    The graph says “direct labour” while the article says “direct and indirect labour”.