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The premise turns on the batteries: They are still expensive and need replacing every 7-10 years. If you're modeling the cost of ownership, you should be factor

The premise turns on the batteries: They are still expensive and need replacing every 7-10 years. If you're modeling the cost of ownership, you should be factoring in a new battery pack after 10 years. (Message to ye who covet 1,000,000 miles) Therefore, the rate of adoption will be somewhat modulated by the ecosystem of lithium ion materials and production. It's obvious Tesla sees this as a crux since they are investing billions in battery production. Li ion Battery cost per KWh has already been falling at about -14% annualized over the last 10 years [0]. However, mass adoption of EV autos changes the demand side considerably and we therefore cannot assume the same rate of decline as we have seen recently. Perhaps we will, given the ramping production, but if they don't move more or less in step, prices could be somewhat stubborn. [0] https://cleantechnica.com/2015/03/26/ev-battery-costs-already-probably-cheaper-than-2020-projections/ https://cleantechnica.com/2015/03/26/ev-battery-costs-alread...

epistasis 9y ago
It could go either way, honestly. Solar has shown that as production is vastly overbuilt, prices plummet and a lot of people go out of business because they were assuming higher prices than they were able to charge. It seems likely that lithium ion battery production is going to face a similar fate. Tons of people interested in the space, enticed by a market that's set to explode in size.
- greglindahl 9y ago
  Note that solar production, or dram production, or flash memory production generally doesn't go down during the shakeouts. It does cause fluctuations in dram and flash memory prices.
hwillis 9y ago
Teslas have been showing around ~8% degradation at 100k miles. Battery degradation drops fastest at the beginning, so it would be unsurprising for the batteries to still have 80%+ capacity at 250,000 miles. That's quite good. https://electrek.co/2016/06/06/tesla-model-s-battery-pack-data-degradation/ https://electrek.co/2016/06/06/tesla-model-s-battery-pack-da...
- hyperbovine 9y ago
  Also 80% capacity seems still quite useful for many other applications like grid storage. It's really only an issue when weight and space are at a premium. There will probably emerge a robust secondary market for used EV cells.
  - jsight 9y ago
    On something like the P100, 80% still sounds like a pretty good car.
  - hwillis 9y ago
    A guy in this submission was saying he would give 50% margin on his actual driving range for battery degradation. At this rate that would take over 600,000 miles to get to 66% of original capacity, and probably longer. I agree that the secondhand battery market will probably be very strong, but it's also likely that the tail end of electric vehicles will be extremely long regardless. In older cars you stop caring so much about the little things breaking, and if the car still goes places, people will still want it. In all likelihood Tesla vehicles will still be going places for several decades.
dangrossman 9y ago
> Perhaps we will, given the ramping production, but if they don't move more or less in step, prices could be somewhat stubborn There's somewhere in the range of 35-50 gigawatt-hours (GWh) of annual lithium ion battery production capacity at existing manufacturing facilities worldwide right now. By 2020, under three years from now, that will triple or quadruple to 150-200 GWh, based on new factories that have broken ground or money already committed to expansion from BYD (20 GWh), Boston Power (10 GWh), LG Chem (7 GWh), CATL (50 GWh), Panasonic/Tesla (35-50 GWh), Foxconn (15 GWh), Samsung SDI, SK Innovation, and others. Given how long it takes auto manufacturers to take new cars to market and grow their sales (years) and how few are actually far along enough to hit the market in the next year or two, I don't think the supply side of the battery market will have any trouble keeping up with demand. It may even be too much, lowering prices.
- monkmartinez 9y ago
  Wait until the "OPEC" of lithium emerges from the coming price wars... If you don't think that will happen, I have some land in Yuma, Beach front.
  - pg_bot 9y ago
    Cartels are unstable by their nature, OPEC is the exception not the rule. Cartels can only thrive when there is a lack of competition and strong enforcement between member nations. There is a reason why we don't hear of coal or natural gas cartels which are substitute goods for oil.
    - cirgue 9y ago
      Even OPEC is not much of an exception: they've only occassionally been effective at coordinating outputs, and supply dynamics typically overwhelm OPECs ability to respond.
      - Kadin 9y ago
        OPEC is definitely an exception in that it stayed together even though there are multiple times when it wasn't clearly in any of the members' economic best interests to participate or maintain the cartel's supply control. This is pretty obviously because it's a political rather than economic organization: the member states have political reasons for wanting to remain in control of the supply which probably exceed the rational reasons for pursuing revenue maximization. It seems unlikely that the countries with significant lithium reserves have enough in common politically, to maintain a similar cartel. Not that some might not try. But they will also have to deal with the fact that OPEC did it first, and major powers may be unlikely to allow that to be repeated.
jdietrich 9y ago
Most internal combustion engines are only good for ~200,000 miles, even with excellent maintenance. A worn-out engine is good only for scrap, but an EV battery pack with 50% capacity is still very useful as a solar storage battery. Most of the 2011 Nissan Leafs are still going strong with ~80% capacity. Their outright failure rate is less than 0.02%. Cell and battery pack technology has improved dramatically since then, so I'd be very optimistic about the useful lifespan of a brand new Model S or Chevy Bolt.
- bogomipz 9y ago
  >"Most internal combustion engines are only good for ~200,000 miles" Interesting and I think that figure is is generally accepted and I believe this is due to shear stress on the engine block no? I know older cars that came out of Detroit when engine block were cast iron could get up to ~300k miles(the slant 6 comes to mind) but I believe nearly all engine blocks in recent makes are aluminum now.[1] The referenced article says there's parity between now between the two but that doesn't correlate with my own admittedly limited and anecdotal observations. [1]http://articles.latimes.com/2000/oct/18/news/hw-37969 http://articles.latimes.com/2000/oct/18/news/hw-37969
  - jsight 9y ago
    It is generally accepted, but I'm not convinced that it is true. I suspect that most cars get replaced well before the engine's ultimate fairly. In my own (anecdotal) experience, they burn a little oil at 200k, but have plenty of life left in them.
  - Arizhel 9y ago
    In the days of the Slant-6, cars never got to 300k miles unless they had ridiculously meticulous maintenance. Detroit cars were lucky to get to 100k without falling apart. These days, cars are barely broken-in at that age, and 200k is nothing remarkable. If you're not getting that kind of lifetime, then you need to stop buying a crappy brand.
    - bogomipz 9y ago
_ph_ 9y ago
You have to distinguish between manufacturing costs and market price. The costs are going to be down as the volume is going to be raised massively, if a significant part of the car production is going to be electric. Which also implies that the free market prices are going to go up short term for all car manufacturers, who have not secured their own battery supply. But for those who have, or even have their own battery production (Tesla), costs are pretty much guaranteed to go down, as measured by scale, industrial production is just about to start. It is also not as clear as you put it, that you have to get a new battery pack after "10 years". With batteries having 50 kWh and more, longer lifetimes are to be expected. And unlike car engines, batteries don't fail randomly, they have a clear observable capacity loss. You can either decide to just keep driving your car, if you can live with just 70% of its original range, or update your battery, but then the old battery has a resale value proportional to its remaining capacity.
kyriakos 9y ago
7-10 years battery lifetime is not that bad. A lot of cars get replaced after the first 7 years of their life.

epistasis 9y ago

It could go either way, honestly. Solar has shown that as production is vastly overbuilt, prices plummet and a lot of people go out of business because they were assuming higher prices than they were able to charge. It seems likely that lithium ion battery production is going to face a similar fate. Tons of people interested in the space, enticed by a market that's set to explode in size.

greglindahl 9y ago
Note that solar production, or dram production, or flash memory production generally doesn't go down during the shakeouts. It does cause fluctuations in dram and flash memory prices.

hwillis 9y ago

Teslas have been showing around ~8% degradation at 100k miles. Battery degradation drops fastest at the beginning, so it would be unsurprising for the batteries to still have 80%+ capacity at 250,000 miles. That's quite good. https://electrek.co/2016/06/06/tesla-model-s-battery-pack-data-degradation/ https://electrek.co/2016/06/06/tesla-model-s-battery-pack-da...

hyperbovine 9y ago
Also 80% capacity seems still quite useful for many other applications like grid storage. It's really only an issue when weight and space are at a premium. There will probably emerge a robust secondary market for used EV cells.
- jsight 9y ago
  On something like the P100, 80% still sounds like a pretty good car.
- hwillis 9y ago
  A guy in this submission was saying he would give 50% margin on his actual driving range for battery degradation. At this rate that would take over 600,000 miles to get to 66% of original capacity, and probably longer. I agree that the secondhand battery market will probably be very strong, but it's also likely that the tail end of electric vehicles will be extremely long regardless. In older cars you stop caring so much about the little things breaking, and if the car still goes places, people will still want it. In all likelihood Tesla vehicles will still be going places for several decades.

dangrossman 9y ago

> Perhaps we will, given the ramping production, but if they don't move more or less in step, prices could be somewhat stubborn There's somewhere in the range of 35-50 gigawatt-hours (GWh) of annual lithium ion battery production capacity at existing manufacturing facilities worldwide right now. By 2020, under three years from now, that will triple or quadruple to 150-200 GWh, based on new factories that have broken ground or money already committed to expansion from BYD (20 GWh), Boston Power (10 GWh), LG Chem (7 GWh), CATL (50 GWh), Panasonic/Tesla (35-50 GWh), Foxconn (15 GWh), Samsung SDI, SK Innovation, and others. Given how long it takes auto manufacturers to take new cars to market and grow their sales (years) and how few are actually far along enough to hit the market in the next year or two, I don't think the supply side of the battery market will have any trouble keeping up with demand. It may even be too much, lowering prices.

monkmartinez 9y ago
Wait until the "OPEC" of lithium emerges from the coming price wars... If you don't think that will happen, I have some land in Yuma, Beach front.
- pg_bot 9y ago
  Cartels are unstable by their nature, OPEC is the exception not the rule. Cartels can only thrive when there is a lack of competition and strong enforcement between member nations. There is a reason why we don't hear of coal or natural gas cartels which are substitute goods for oil.
  - cirgue 9y ago
    Even OPEC is not much of an exception: they've only occassionally been effective at coordinating outputs, and supply dynamics typically overwhelm OPECs ability to respond.
    - Kadin 9y ago
      OPEC is definitely an exception in that it stayed together even though there are multiple times when it wasn't clearly in any of the members' economic best interests to participate or maintain the cartel's supply control. This is pretty obviously because it's a political rather than economic organization: the member states have political reasons for wanting to remain in control of the supply which probably exceed the rational reasons for pursuing revenue maximization. It seems unlikely that the countries with significant lithium reserves have enough in common politically, to maintain a similar cartel. Not that some might not try. But they will also have to deal with the fact that OPEC did it first, and major powers may be unlikely to allow that to be repeated.

jdietrich 9y ago

Most internal combustion engines are only good for ~200,000 miles, even with excellent maintenance. A worn-out engine is good only for scrap, but an EV battery pack with 50% capacity is still very useful as a solar storage battery. Most of the 2011 Nissan Leafs are still going strong with ~80% capacity. Their outright failure rate is less than 0.02%. Cell and battery pack technology has improved dramatically since then, so I'd be very optimistic about the useful lifespan of a brand new Model S or Chevy Bolt.

bogomipz 9y ago
>"Most internal combustion engines are only good for ~200,000 miles" Interesting and I think that figure is is generally accepted and I believe this is due to shear stress on the engine block no? I know older cars that came out of Detroit when engine block were cast iron could get up to ~300k miles(the slant 6 comes to mind) but I believe nearly all engine blocks in recent makes are aluminum now.[1] The referenced article says there's parity between now between the two but that doesn't correlate with my own admittedly limited and anecdotal observations. [1]http://articles.latimes.com/2000/oct/18/news/hw-37969 http://articles.latimes.com/2000/oct/18/news/hw-37969
- jsight 9y ago
  It is generally accepted, but I'm not convinced that it is true. I suspect that most cars get replaced well before the engine's ultimate fairly. In my own (anecdotal) experience, they burn a little oil at 200k, but have plenty of life left in them.
- Arizhel 9y ago
  In the days of the Slant-6, cars never got to 300k miles unless they had ridiculously meticulous maintenance. Detroit cars were lucky to get to 100k without falling apart. These days, cars are barely broken-in at that age, and 200k is nothing remarkable. If you're not getting that kind of lifetime, then you need to stop buying a crappy brand.
  - bogomipz 9y ago

_ph_ 9y ago

You have to distinguish between manufacturing costs and market price. The costs are going to be down as the volume is going to be raised massively, if a significant part of the car production is going to be electric. Which also implies that the free market prices are going to go up short term for all car manufacturers, who have not secured their own battery supply. But for those who have, or even have their own battery production (Tesla), costs are pretty much guaranteed to go down, as measured by scale, industrial production is just about to start. It is also not as clear as you put it, that you have to get a new battery pack after "10 years". With batteries having 50 kWh and more, longer lifetimes are to be expected. And unlike car engines, batteries don't fail randomly, they have a clear observable capacity loss. You can either decide to just keep driving your car, if you can live with just 70% of its original range, or update your battery, but then the old battery has a resale value proportional to its remaining capacity.

kyriakos 9y ago

7-10 years battery lifetime is not that bad. A lot of cars get replaced after the first 7 years of their life.