MIT Pumps the Brakes on Electric Vehicle Cost Decline Estimates

new report from the MIT Energy Initiative warns that EVs may never reach the same sticker price so long as they rely on lithium-ion batteries, the energy storage technology that powers most of today’s consumer electronics. In fact, the research found it will likely take another decade just to eliminate the difference in the lifetime costs between electric vehicles and gas- and diesel-powered vehicles, even after higher fuel and maintenance expenses of standard cars and trucks are taken into account.

Hopefully Governor Walz and the Minnesota Pollution Control Agency, who want to adopt California regulations mandating the use of electric cars, take notice.

According to the article in the MIT Technology Review, the findings of the study “sharply contradict those of other research groups, which have concluded that electric vehicles could achieve price parity with gas-powered ones in the next five years. The lingering price difference predicted by the MIT report could stunt the transition to lower-emission vehicles, requiring governments to extend subsides or enact stricter mandates to achieve the same adoption of EVs and cuts in climate pollution.”

Why is MIT less bullish on EV’s? are these cost gaps likely to remain?

The problem is that the steady decline in the cost of lithium-ion batteries, which power electric vehicles and account for about a third of their total cost, is likely to slow in the next few years as they approach limits set by the cost of raw materials.

“If you follow some of these other projections, you basically end up with the cost of batteries being less than the ingredients required to make it,” says Randall Field, executive director of the Mobility of the Future group at MIT. “We see that as a flaw.”

Indeed. The MIT study continues:

number of commercial and academic researchers have projected that the costs of such batteries will reach $100/kWh by 2025 or before, which many proclaim is the “magic number” where EVs and gas-fueled vehicles reach retail price parity without subsidies. And they would continue to fall from there.

But reaching the $100 threshold by 2030 would require material costs to remain flat for the next decade, during a period when global demand for lithium-ion batteries is expected to rise sharply, MIT’s “Insights into Future Mobility” study notes. It projects that costs will likely fall only to $124 per kilowatt-hour by then. At that point, the “total cost of ownership” between the categories would be about the same, given the additional fuel and maintenance costs of gas-fueled vehicles. (Where these lines cross precisely depends heavily on local fuel costs and vehicle type, among other factors.)

But the sticker price of an EV with 200 miles of range would still run thousands of dollars more than a comparable gas-fueled vehicle in many areas. While closing the gap on total cost of ownership would be a solid step for electric vehicles, the average consumer is very sensitive to the upfront price tag—and what it equates to in monthly payments.

Costs are likely to continue to improve as, among other things, companies reduce the level of pricey cobalt in battery components and achieve manufacturing improvements as production volumes rise. But metals mining is already a mature process, so further declines there are likely to slow rapidly after 2025 as the cost of materials makes up a larger and larger portion of the total cost, the report finds.

Metals prices are also likely to increase if we don’t allow mines to be permitted in Minnesota because we have some of the largest undeveloped copper and nickel deposits in the world, and Minnesota has the largest deposits of cobalt in the United States. If environmental groups were serious about wanting to facilitate renewable energy production, they would want metals prices to be as low as possible and that means allowing ample supply, not opposing mining at every possible juncture.

The MIT study also found that electric vehicles are not truly “zero emissions.”

Currently, US carbon emissions per mile for a battery electric vehicle are on average only about 45% less than those from a gas-fueled vehicle of comparable size. That’s because fossil fuels still generate the dominant share of electricity in most markets, and the manufacturing process for EVs generates considerably higher emissions, mainly related to the battery production.

American Experiment has shown that it would be far more affordable, and far more sustainable, to reduce CO2 emissions using nuclear power plants that can last 80 years, rather than using wind turbines and solar panels that last 20 years and 25 year, respectively. Only nuclear and hydro can provide the around-the-clock power needed to power our modern way of life when it is -24 degrees F at nighttime during a Minnesota winter.

The MIT report closes with stating that if EVs cannot  compete on price directly with fossil fuels, “public policy will need to play a larger role in driving EV adoption.” In my opinion, this is the wrong takeaway. Minnesota families deserve the right to choose which cars best suit their particular needs. Mandating the use of electric vehicles that are more expensive and less practical than their gas- and diesel-powered alternatives does not make sense, which is why Governor Walz should pump the brakes on his proposed EV mandates.