EV Costs are Not What You Think

Lithium catches a lot of headlines, but it is only 4% of the cost of a typical electric vehicle battery. The key costs in an EV battery are: #1 the cathode, typically made up of Nickle or Cobalt oxides and #2 the anode, which is made up of graphite. By weight, batteries are about 50% graphite and 25% cathode materials.

Getting to Breakeven

In order to breakeven with the cost of an internal combustion engine (ICE), EV battery costs need to fall about 25% to breakeven for a luxury SUV and 50% to match those of a mass market sedan. Battery technology is supposed to continue improving so that EVs breakeven with mass market sedans in 2030. A suspiciously round number.

Already Half Way There

Tesla has a significant cost advantage over other EV manufacturers since its has scaled its production of vehicles and batteries. The good news is that manufacturers can get half way to breakeven for mass market vehicles by scaling production to match Tesla’s.

Production Capacity is Key

Until now, availability has been the limiting factor on EV growth with Tesla being the only major player. As the national flagship manufacturers globally roll out EV lineups in 2023-2026, price and value may become more significant determinants of EV industry growth.