Electric vehicles will soon undercut combustion cars on a lifecycle or “total cost of ownership” basis on pure price in most places. “We estimate that cost parity without subsidies could be achieved around mid-decade,” they said.
Loading
EVs are already cheaper in China on purchase price alone – the BYD Seagull retails from $US10,200 ($16,000) – but that is chiefly because production has been heavily subsidised in all kinds of ways. National (not local) subsidies have now been cut to zero. China is moving to the next stage of price wars and ferocious cost-cutting.
The tipping point for an EV consumer take-off is when the “payback time” from lower running costs is under three years. Goldman thinks this will happen in China by 2025. EV sales will then go parabolic,leading to 80 per cent penetration by 2030.
This may understate the lightning speed of the change. Li Xiang,head of Chinese carmaker Li Auto,is betting that the 80 per cent threshold will be reached as soon as 2025. But let us not quibble.
A clutch of new technologies are hitting the global market and will lead to a new set of winners and losers by 2026. Chemists have long eyed silicon as a substitute for graphite in battery anodes. It can store over 10 times as much lithium and therefore has far higher energy density – for anoraks,4200mAh/g v 372mAh/g. It is abundant and has a lower CO2 footprint,but has been too unstable for anodes until recently.
The industry has now figured out how to harness silicon using nanotechnology. One leading start-up is the British firm Nexeon,a spin-off from Imperial College,London. It is building a commercial-scale plant in Korea to supply batteries for Panasonic,blending carbon and silicon as its secret sauce.
China’s BYD Seagull,priced from about $16,000,on show in Shanghai.Credit:Bloomberg
The company’s Karandeep Bhogal told me that this cut costs by 20 per cent,boosts the driving range by 20 per cent to 40 per cent,and opens the way for a flood of smaller mass-market EVs.
The Chinese battery maker BYD,now the top global producer of EVs by volume,has stolen a march with its new “blade” batteries. These are less likely to catch fire,charge extremely fast,and last 1.2 million kilometres on 3000 cycles. They are already being used in some Tesla and Mercedes models.
Toyota missed the first EV wave but is betting on resurrection from its “bipolar” battery,the fruit of 20 years’ research. An LFP variant will come into play in 2026-27 with a range of nearly 800 kilometres and at a cost of $US95 kWh,followed a year later with a muscular version reaching 1400-kilometre range at around $US115 kWh.
Big cylindrical batteries are coming of age,too. Tesla has slashed $US2000 to $US3000 from the cost of its 4680 battery pack by cutting the number of cells by 80 per cent. All these intermediate technologies are hitting the market or will be by mid-decade.
This is before the larger quantum leap to solid-state batteries,with double or even triple the energy density of lithium ion batteries. These will start to appear at viable cost in 2027-28 or soon after.
My conclusion:it is already irrelevant whether or not Britain and Europe have a petrol and diesel sale ban in 2035. The market will pre-empt it. If collectors want to keep buying a petrol car in the 2030s for political or nostalgia reasons,let them,so long as they are charged for the CO2 cost to society.
In an ideal world,Britain should buy cheap batteries directly from China under the principle of Ricardian comparative advantage. It should focus industrial policy on hi-tech,rather than joining the European subsidy race for copy-cat gigafactories.
Loading
But the world is not ideal. The local content rules of the Brexit trade deal mean that carmakers cannot sell into Europe’s EV market without tariffs unless a rising share comes from local (or EU) sources,so the UK has to join this gigafactory rat race or watch its car industry snatched away – the explicit goal of Thierry Breton,the internal market commissioner.
What is striking in the Goldman Sachs report is how marginal Europe has become to the creative explosion in battery technology. It risks spending exorbitant sums trying to close the EV chasm,only to find that it is still a Chinese battery province a decade hence.
Somebody should have paid more attention when America’s Tesla produced its first car in 2008 with a range of 245 miles,a top speed of 125 mph,and breathtaking acceleration. They should have paid even more attention when China and Korea ran away with the global battery trade.