Why Are EV Batteries So Expensive?

Published On Dec 18, 2019 05:49 PM By Sponsored for MG ZS EV 2020-2022

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While EVs are finding favour in the automotive industry, they continue to be priced significantly higher. Here’s why

In today’s day and age, the automobile industry is focused on finding cleaner energy sources to power vehicles. This is down to factors that include stricter emission norms for a cleaner environment. The main alternative energy focus among manufacturers is electric power. EVs have recently been booming across the automotive industry with more and more carmakers joining the fray. India’s EV revolution has also started to take shape with new entrants like the MG ZS EV. 

Unfortunately, one of the obstacles in the adoption of EVs is their high cost. Most of the additional charges come down to the batteries that power the electric motor. However, we should understand why batteries are so expensive today and how costs will progressively decrease. 

Some of the reasons include the technology being labour-intensive as well as the battery consisting of various materials. An electric vehicle’s battery pack, comprising lithium-ion cells, uses metals such as lithium, cobalt, nickel and manganese. The problem here is that the production architecture is not enough to mass produce these batteries, making it more expensive over the likes of lead-acid batteries. However, the positive here is that these batteries are claimed to be long-lasting. EVs could last up to 2 lakh kms, which is more than the average consumer vehicle. Hence, lower maintenance costs.

Moreover, EV battery supply chains are still limited, with China producing majority of lithium batteries in the world. But things are getting better. In the last decade, the cost of batteries has gone down by 85 per cent from USD 1,160 per kWh in 2010 to USD 176 per kWh in 2018. Fortunately, carmakers are catching up with new technologies and expanding supply chains worldover. So, we can expect costs to slowly go down as EV technology gets more adaptable.

The third and most important reason is that there aren’t enough players in this segment to warrant competitive and affordable pricing. However, manufacturers are planning to electrify their entire range by the end of the next decade, which should give further economies of scale. 

While there are technological advancements to make EVs cheaper, the government is also doing its bit with tax redemptions as well as slashing GST rates on Indian EVs from 12 to 5 per cent, resulting in a price cut for various all-electric vehicles. At the moment, vehicles like the MG ZS EV are a starting point to make affordable EVs, with further developments expected to curb the costs of batteries and adaptability

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