Lithium Ion Batteries May Drop Electric Car Prices

Automakers, including Toyota, Daimler, and Bayerische Motoren Werke, are testing lithium ion batteries assembled by Silicon Valley startup Tesla Motors to power electric cars.

The lithium ion batteries cost less than larger batteries developed exclusively for cars and used by automakers like General Motors, Nissan, and Mitsubishi. Tesla's roadster sports car, which sells for $109,000, is powered by a pack of 6,831 Panasonic cylinder-shaped cells that provides up to 245 miles per charge, Bloomberg reported.

Sales of lithium ion batteries will more than triple to $60 billion in the next 10 years, according to the world's largest maker of the batteries, Sanyo Electric, Bloomberg said. Economies of scale may help cut manufacturing costs and sticker prices of rechargeable consumer electronic batteries for the burgeoning electric car industry, an analyst at Tokyo-based Advanced Research Japan told Bloomberg.

"It may lead to the total component cost of an electric car getting lower than that of a gasoline car," Koji Endo said. "As the cost lowers, there'll be more likelihood that retail prices of electric cars will drop."

Presently, consumers pay higher prices for electric volt-powered vehicles, which are more expensive than three-quarters of the cars sold, Bloomberg said, due to the high cost of batteries. The Chevrolet Volt sells for $41,000 and the Nissan Leaf is $32,780.

About 954,000 electric volt cars and hybrids, including plug-in models, will sell this year worldwide, comprising 2.2% of all car sales, industry forecaster J.D. Power and Associates estimated in October, Bloomberg reported. By 2020, just 5.2 million, or less than 10% of the estimated 71 million cars to be sold, are expected to be electric. And according to a Kelly Blue Book survey, only 7% of car shoppers will even consider buying or leasing a new electric car because of the reduced travel range and availability of charging stations.

Tesla is working with Toyota, the world's largest automaker, on an electric RAV4, while Toyota's small, electric car planned for 2012 and the Prius hybrid use larger batteries. Overheating issues have prompted a slew of recalls for lithium ion batteries, due to fire risk. In 2007, the world's largest mobile phone maker, Nokia Oyi, offered to replace as many as 46 million Panasonic phone batteries. An insulator film is now used between electrodes to reduce the risk overheating, Panasonic said.