Consulting firm PRTM suggests that by 2020 the cost for lithium-ion battery technology could be reduced by 50% thanks to operational gains. According to the consultancy’s Director an EV adoption of 10% by then resulting in higher production volumes and process optimisation could make that happen.

Even though reports from the Boston Consulting group as well as National Research Council were more sceptical about the cost development of li-ion technology for electric vehicles, Oliver Hazimeh sees the future quite positive.

According to the Green Car Congress, the Director and head of the global e-Mobility department at the international consultancy firm PRTM, predicts that total lithium-ion battery cost reductions could exceed 50% by 2020. His estimation assumes that the adoption rate for electric vehicle will rise to 10% of new vehicles by 2020 which could then result in reduced battery costs primarily through operational gains.

The higher production volume would lead to economies of scale, manufacturing process optimisation, as well as other operational advantages. In detail, PRTM sees the following three specifics as main reasons for the battery cost reduction:

• Production/Manufacturing Process Optimisation: PRTM predicts 20-25% reduction in battery costs alone due to the increase in production volumes that lead to process optimisation and scale efficiencies. The predicted volume includes 500,000 units of battery packs and 200 million of battery cells per year.
• Supply Chain Design: Through pooling of material spends as well as design optimisation of the supply chains when volumes increase a 10-15% cost reductions could be possible.
• Product Complexity and Design: According to Hazimeh, the optimisation of the design platform will reduce product complexity, which will further reduce battery costs. De facto standards have a potential cost reduction of 10% and improvements in material advancement and battery design that increase battery performance and reduce functional cost will yield an additional 10% in cost reduction.