Grid Scale, Solar, Storage

Can EVs Reach a 20% Penetration?

There’s a deep divide in the energy and transportation space over electric vehicles. Put supporters and detractors in a room (or a comment board) together, and you’re bound to get a heated discussion.

Like the debate, the signs are certainly mixed for the future of the EV market.

With new battery factories being built, charging stations deployed en masse and popular car models getting rolled out, there are a number of factors working in favor of plug-in hybrids and all-electric vehicles.

But batteries are still expensive – in some cases over $1,000 per kWh for lithium ion technologies. In order to become competitive with gasoline, the Advanced Battery Consortium is shooting for a more than 50% cost reduction over the next 4 years. Skeptics say that high commodity prices and limited access to rare materials will make that target very difficult.

The research firm Bloomberg New Energy Finance projected this week that high penetrations of EVs are possible in the U.S. by 2020 – but only with a significant increase in gasoline prices and cost reductions in battery production.

BNEF analysts projected that plug-in hybrids and battery electric vehicles could make up 9% of auto sales in 2020 and climb to 22% – or 4 million cars – by 2030. According to BNEF, the GM Volt will be targeting an addressable market of 7% of total US auto sales, and the Nissan Leaf 11%. However, actual sales will be much lower and limited by vehicle availability.

The model also forecasts sensitivity to gas prices, which will have a considerable effect on uptake. According to BNEF, rises in electricity prices do not affect sales severely, as fuel costs are a lower proportion of the total cost of ownership for electric vehicles.

In order to address this coming demand, various renewable energy companies, utilities, government labs and university research groups have announced projects on how to integrate EV charging stations and distributed renewables onto the grid. The latest news came from the solar leasing company SolarCity, which is working with Tesla and UC Berkeley on developing grid-interactive storage technologies for EV applications.

In a statement, BNEF’s CEO Michael Liebreich acknowledged the wide-spread impact of EV adoption.

“2011 will see the launch of a large number of new plug-in hybrid and electric vehicle models around the world. It’s not just car companies who have a lot riding on their success – utilities; oil companies; whole countries will feel the impact if there is rapid uptake.”

The extent of the impact will depend heavily on how quickly battery manufacturers can lower their costs and thus, the price of a car.

In the short term, reported BNEF, price will be the most significant limitation to the uptake of both plug-in hybrid vehicles like the GM Volt and fully electric vehicles such as the Nissan Leaf. The median base price of autos sold between July 2009 and June 2010 in the US was $21,800. By comparison, the Nissan Leaf will cost $26,280 after federal subsidies (including an allowance for charger installation), which is a higher price point than three quarters of all new auto sales.