Electric car makers turning to lithium-ion batteries to decrease costs

As major automobile manufacturers like GM and Nissan release mainstream electric vehicles, concerns abound over the costs associated with the emerging automobile sector. On average, electric vehicles cost more than conventional models, but with advances in the manufacturing of batteries, that could change.

Bloomberg reports that rechargeable consumer-electronics batteries benefit from an economy of scale that could potentially cut manufacturing costs and reduce the price of electric cars. Because of the advances in batteries, the "total component cost of an electric car" could get "lower than that of a gasoline car," according to Koji Endo, an analyst at Advanced Research.

Tesla Motors Inc., a Bay area start-up, assembles Panasonic supplied lithium-ion battery packs that Toyota and BMW favor and affirms that they cost less than the car-only batteries that GM and Nissan have adopted. After opening an additional plant in Japan, Panasonic increased its production capacity by 9 percent to 1.4 billion units. Martin Eberhard, Tesla's founder, asserted that larger batteries cost $700-$800 per kilowatt hour to produce, while his company's offering cost around $200. His company's product benefits from what he deems a "huge advantage in terms of economy of scale," leading to increased manufacturing efficiency.

Currently, Tesla's Roadster sports car is powered by a pack of 6,381 cells that the company assembles: they store enough power to drive for up to 245 miles on a single charge. Sanyo Electric Co. estimates that lithium-ion batter makers will triple sales to $60 billion in ten years as demand keeps expanding.