For Immediate Release
Ellen Carey
Director of Media Relations
direct: 202.461.2382
December 21, 2009

Response to National Research Council Study:

Transitions to Alternative Transportation Technologies: Plug-In Hybrid Electric Vehicles

The National Research Council’s December 14 Report about the potential penetration rate of plug-in hybrid electric vehicles (PHEVs) contains battery costs and technology assumptions that are well beyond the range of current industry data. These estimates ultimately provide the basis for a broader analysis that is fundamentally flawed in numerous ways.

The NRC report presents an inaccurate overview of both PHEVs in particular and electrification technology more broadly. Specifically, the NRC posits that lithium-ion battery "costs are still high, and the potential for dramatic reductions appears limited." Based largely on this assessment, the NRC believes that the potential for PHEVs to penetrate the overall vehicle fleet is extremely limited.

The NRC study significantly overestimates current battery costs, placing them out of line with published research by DOE National Laboratories, exhaustive research by auto-industry analysts and current industry experience.

  • A wide range of technical research has found that the cost/kWh for lithium-ion batteries decreases by as much as 50 percent as the energy-to-power ratio shifts toward higher energy,1 yet the NRC study suggests that a PHEV-40 would have cost/kWh higher than a PHEV-10.
  • Fully assembled battery costs for the GM Volt, a series format PHEV-40 with a 16 kWh nameplate capacity (identical to the specifications of the PHEV-40 in the NRC report), have been reported at between $500 and $625 per kWh—significantly less than the NRC’s estimate of $875/kWh.
  • Researchers at Argonne National Laboratory recently estimated PHEV-40 battery costs at an even lower $200 to $400/kWh across a variety of battery chemistries.2

The battery and vehicle costs assumed by the NRC generate inaccurate estimates of the cost-effectiveness of PHEVs. The flawed cost assumptions also result in subsidy estimates that are widely off-mark.

  • In fact, with the existing tax credits provided by the American Recovery and Reinvestment Act of 2009, both a PHEV-10 and a PHEV-40 would be cost-effective for consumers today.3
  • Based on current and expected industry costs, a PHEV-40 will be cost effective for consumers in 2015—without any government subsidy whatsoever.4 In other words, the fuels savings over the life of a PHEV-40 in 2015 will more than compensate for the vehicle’s cost premium; tax subsidies will no longer be necessary.

The NRC study inappropriately discounts future reductions in battery costs derived from technological improvements and scale production.

  • A main contributor to battery cost is current lack of production volume, or scale. Data from the Department of Energy suggests a plant that is capacitized to produce 100,000 battery packs per year will have battery costs that are 38 percent to 44 percent less than a 10,000 unit plant.5 The NRC report discounts this factor.
  • A recent analysis conducted by TIAX, LLC found future costs between $212-$568/kWh for a PHEV battery with 6.9 kWh of total energy (roughly a PHEV-25). The analysis incorporated a range of variables across four current battery chemistries produced at high volumes—500,000 units per year.6
  • The NRC study correctly reports that current PHEV batteries utilize a 50 percent state-of-charge window. That is, a PHEV-40 battery today is designed to require only 8 kWh of its16 kWh capacity in order to travel 40 miles in pure electric mode. This practice comes at significant cost, driving current battery prices higher than technical requirements. In first-generation applications, PHEV manufacturers made the strategic decision to add extra capacity in order to ensure end-of-life performance metrics and meet battery warranty requirements. However, advancements already achieved have reduced the need to over-specify PHEV batteries and expanded the state-of-charge window, thereby reducing costs for assembled battery packs. The NRC study appears to discount this entirely.
  • Various lithium-ion battery characteristics differ significantly by chemistry and format. For example, the state-of-charge window utilized by one battery-maker is already as high as 70 percent. The NRC study relies heavily on data and performance characteristic associated with a limited number of chemistries and battery sizes.
  1. Fritz Kalhammer, EPRI, 24th International Electric Vehicle Symposium (EVS-24), Stavanger, Norway, May 2009
  2. Danilo J. Santini, Center for Transportation Research, Argonne National Laboratory, “Battery Pack Requirements and Targets Validation, FY 2009 DOE Vehicle Technologies Program,” (2009), p.8
  3. Electrification Coalition, PRTM, “Electrification Roadmap,” (2009) p. 134
  4. Id.
  5. Paul Nelson, Argonne National Laboratory, “Modeling Manufacturing Costs of Lithium-Ion Batteries for PHEVs,” (2009) p. 25
  6. Brian Barnett, TIAX, LLC, “PHEV Battery Cost Assessment,” (2009) p. 14
Featured Quote

“Look at it this way: If 75 percent of the miles traveled by 2040 are not electric miles, how many internal-combustion cars will we then have, how many gallons of oil will we then be consuming and how much money will we then be shipping overseas, year after year, to pay for that gasoline?”

Steven Heller
Executive Chairman, CODA Automotive
NY Times, November 16, 2009