High Battery Costs for Electric Vehicles Obstructing Semiconductors' Growth

Despite a sluggish forecast for the overall high-tech industry in the near term, alternative energies technologies are expected to grow at a 40% annual rate through 2012, and semiconductors used in these applications will see a comparable growth, according to a report Semiconductors for Alternative Energy Technologies: Opportunities and Markets, recently published by The Information Network.

However, one of the laggards in the alternative energy space is the use of electric vehicles. Light-weight, high-energy-density lithium ion batteries, which can enable a car to go up to 300 miles on a charge, can cost as much as $35,000, which coincidentally is the replacement cost for the new Tesla Motors Roadster.

According to John Peterson in his April 6 article in Seeking Alpha (Lithium-ion Batteries: 9 Years of Price Stagnation), the U.S. DOE reported in 2008 that the cost of high-energy Li-ion batteries for EV applications "is approximately a factor of three-five too high on a kWh basis."

Even cars designed for driving less than 40 miles per day, such as the Chevy Volt, will incorporate a battery pack that can cost more than $10,000.

Semiconductors in electric vehicles are used as inverters and bi-directional dc-dc converters for vehicle power management. NREL is working toward goals to develop by 2010 an integrated electronics system that costs no more than $12/kW peak and can deliver at least 55 kW of power for 18 seconds and 30 kW of continuous power. That equates to $360 per vehicle.

The semiconductor market in 2008 for solar, wind, and fuel cells was nearly $800 million and will more than double to nearly $2 billion in 2012 according to the report. If the industry could sell 10 million electric vehicles in 2012 by reducing battery and electronics costs, the semiconductor content could add several billion dollars more to the market.

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Comments

[THofler:]

The obvious compromise is to use a smaller battery.

A series hybrid/EV like the Chevy Volt can operate with much higher fuel efficiency than a Prius-like parallel hybrid, as long as the battery is big enough to power up a big hill. Perhaps a 5 to 10 mile range battery would do. A 10 to 15 mile battery range would be enough to make the plug-in, pure EV mode worthwhile, given how much short-tripping most folks do.

Now if we could back-off on NOx & particulate emission restrictions a little and put a tiny diesel in that Chevy Volt, then we would likely have a 120 mpg car (ignoring plug-in gains).

Apr 09 11:30 PM

[john s. gordon:]

the IC engine of an electric hybrid vehicle sold in europe will probably be a diesel (they have clean diesel already in europe.)
> jack

Apr 10 08:49 AM

[Jack Lifton:]

John, You've made a good point. Imagine a Prius with a small diesel, and/or a Ford Fusion/Milan hybrid with a diesel, and you've got low emission hybrids with 50-70 mpg range and good to excellent performance. My guess is that a Ford Fusion/Hybrid with a nickel metal hydride battery and a diesel 6 would have a range on a 16 gallon tank of 800-1000 miles. Why on earth would anyone want a 40 mile range smaller car with less carrying capacity for up to $10,000 more. Ordinary American consumers when confronted with the choice will pick the Ford product every time for value for their hard earned money. A few elites will buy a Volt to show how green they are, but it will not be their daily used vehicle. That will remain the Bentley, Lexus, BMW, or Mercedes, and the silliest toy of all, the Tesla.

Apr 10 09:25 AM

[petervankan:]

All these calculations are seriously flawed, becasue they don't take into consideration the zillions of dollars it will cost to fund the wars and the measures needed to survive as a species, that will result from further destrucion of our habitat, the planet. We need green cars now. Even at present prices they are a bargain compared with the alternative of jumping off the cliff.

Apr 10 10:05 AM

[searcher:]

A bargain? For whom? The alternative is not a cliff but, rather, starving and freezing to death in our too dear 'green' alternative vehicles.

Apr 10 11:37 AM

[Gedankonomist:]

Green scare-mongering.

On Apr 10 10:05 AM petervankan wrote:

> All these calculations are seriously flawed, becasue they don't take
> into consideration the zillions of dollars it will cost to fund the
> wars and the measures needed to survive as a species, that will result
> from further destrucion of our habitat, the planet. We need green
> cars now. Even at present prices they are a bargain compared with
> the alternative of jumping off the cliff.
>

Apr 10 03:09 PM

[Nick Gogerty:]

Revenue doesn't equal value. My guess, is that should a market evolve given the competitive dynamics of the automotive space, unless someone has killer IP and isn't usurped by 2 guys in a garage, the marginal Value add for the Semi guys will be small.

It may help use a bit of excess capacity, but most likely a standard will evolve, the market space will be comodified and the bargaining power will be held by the manufacturers who control the end relationship. Classic tech value trap.

Apr 10 06:26 PM

[Alan Young:]

PLEASE, people! The article is about the investment outlook for semiconductors (I think... it could be a little clearer)-- not about the merits of electric cars. Take your culture wars elsewhere.

So, Mr. Castellano...let's get back to that 40% annual growth -- Is that gross sales? Any predictions as to margins and profitability? Are any US producers competitive with Taiwan, Korea, Japan, etc.? And most important, what macro assumptions about the economy does this estimate depend on?

Apr 10 08:26 PM

[ripskii:]

Honda has developed a clean diesel engine sold in Europe for several years. They say they will bring it to the US in the next year or so and it will meet all the clean air standards without any additional additives. Combining it with hybrid technology could make it a mileage winner and very practical for general use. They achieved 90 mpg in European tests on the straight diesel so a hybrid version might realize something similar in real world use. Smaller batteries for such an efficient engine would reduce costs and stimulate sales including the semis that would be used in this application.

Apr 10 10:18 PM