THE KILOWATT RACE

Gordon Moore, of Intel fame, famously developed “Moore’s Law” in 1965. Moore's Law states that the number of transistors per silicon chip will double roughly every two years while the price would halve over the same period. We've become quite used to new technologies entering our lives at a high price at first, before dropping to a fraction in the years than follow, like flat screen TVs and mobile phones. 

IBM announced a huge advancement in processing power, efficiency, and a transistor chip size of just 2 nanometers, 6 times smaller and 75% more efficient than other chips on the market in mid-2021. Moore’s Law has proven true repeatedly. 

Unfortunately, the same cannot be applied to batteries. While there has been tremendous progress made in the price of battery cell capacity over the last 20 years, unfortunately Moore's Law simply doesn’t and can never apply to battery technology. 

The race has been on to develop a battery that costs less than $100 per kWh. In 2010 the price was over $1,200 per kWh. The price for the latest Tesla Model 3 battery is around $130 per kWh. Although there has been a 10-fold cost reduction in 10 years, it has not followed Moore's Law, and the pace has begun to slow as we reach the limits of lithium-ion. 

The $100 threshold is significant as it will see electric cars become cheaper than their gasoline equivalents to build. The cost of the battery in an electric car is the single most expensive item. Both Tesla and Volkswagen's new battery configurations, as I'll explain below, are already promising a below $100 per kWh battery by 2023. Reducing battery costs is not just about smarter technology and better manufacturing processes, but also smart sourcing materials and minerals. 

Tesla Model 3

Compared to ICE manufacturing, electric is in its infancy. Economies of scale will come as the world shifts to electric, which will drive battery costs down even further. Therefore, there will be economic reductions in the cost per battery pack, along with more technological advancements in management systems, improved mining techniques and metal supply chains. The reason why almost all the EVs produced on the market so far have been large luxury category cars is because the price of the battery is still so expensive. The manufacturers wanted to try and make a margin on the more expensive cars. Cheaper batteries have meant cars like the Tesla’s Model 3 and Volkswagen’s ID 3 are now possible, but we are still not at mass affordability.

Before I get into the new research and technologies, let's look at just what else can be done with existing technology to lower price and squeeze out more range. Starting with Tesla, their ‘Battery Day’, on September 22nd 2020, did contain some of the usual ‘Musk hype’ but the various announcements signal more major milestones in the accelerating electric revolution. Improving battery production methods and the future metal composition of batteries will deliver more efficient and higher density batteries for faster, longer-range cars. 

From mining to production, recycling and metal casting techniques presented by Musk promise to deliver 33% lower lithium production costs for example. Incorporating the battery pack to become the structure of the car itself (instead of a separate battery within the floor) will allow for greater density and the possibility of even further range. This alone promises 35% floorspace capacity saving. Overall, the various announcements promise 56% reduction in the key electric car measure of $ per Kilowatt hour, promising the future of the $25,000 EV. 

From 2018 to 2019, alone, the drop in battery pack production cost has been 13%. With announcements like these, we will continue to see further drops as advances in research and development combined with economies of scale take hold. The announcement of Tesla's new ‘tabless’ 4680 cell promises higher energy density and improved power to weight ratios while streamlining manufacturing. These thicker cells, 46 millimetres wide and 80 high, look like the mini soda cans you get on an airplane. 

Next, let's look at Volkswagen’s attempt to win the kilowatt race. Volkswagen is in the middle of a metamorphosis to become a 100% electric car maker. 

It is incredible to think that not long ago, in 2017, Volkswagen was ordered, by a US Federal Judge, to pay $2.8 billion in criminal fines for rigging diesel-powered cars to cheat on government emissions tests by hiding the true level of the poisonous gas nitrogen dioxide (NO2), emitting from VW tailpipes. The software used to cheat the system hid levels of NO2 that were 40 times worse in the real world than reported. ‘Dieselgate’, cost VW over $30 billion in fines, penalties, and settlements. 

VW sold its diesel cars with gusto in the 2000s — in some cases advertising ‘Clean Diesel’ Technology. There was never anything ‘clean’ about diesel and the sooner it is confined to the history books, the better for our air quality and climate crisis. 
Fast forward to 2021, when VW held its ‘Power Day’ event in February last year, unveiling a strategic roadmap to go ‘all in’ on battery development. Remarkably like Tesla’s ‘Battery Day’, - battery technology is VW’s focus. 

Volkswagen released its much-anticipated ID.3 electric car. The Golf lookalike is the first VW electric car built from the ground up — comprising the floor plate battery pack and electric motors configuration knows as the ‘skateboard’. The ID.3 follows the previous half-hearted attempt, the eGOLF. This was an overweight, overpriced, under-ranged Frankenstein monster which has now been very much replaced by the ID.3. VW have a great reputation for making good, reliable solid cars. My first car was a 1988 VW Golf, I loved it, drove the hell out of it and it never let me down. 

Volkswagen iD.3

Following the shock rise of Tesla, VW is now on a real path to becoming a fully electric car maker and has ambitions to be number one. Asleep at the wheel for two decades while Tesla rose, VW is making a massive, concerted effort to turn electric. Producing an electric car is entirely different to building an ICE car. Despite all their years of proficiency building ICE cars, they had, until now, limited capacity and expertise to replicate Tesla’s one million EV head start. To do this, VW needs to redesign old plants, build new plants, remove legacy inhibitors, and most importantly build batteries on a massive scale. 

The VW announcements confirm they are serious about becoming a global electric car goliath. In 2020 VW announced it would invest over $80 billion in electric car technologies, double what Dieselgate cost them. Mastering battery production is the number one priority in order to achieve its goals. The big stories from its Power Day were its plan to reduce battery costs by up to 50% and be capable of a battery recycling rate of up to 95%. VW didn’t just announce an ‘economies of scale’ plan to reduce battery costs, but new production methods and technologies. They include the development of six ‘Gigafactories’ with a total production capacity of 240 gigawatts of battery output to be operational by 2030. To reduce the cost and complexity of battery cell and pack production, VW plans to integrate battery management systems (mostly the essential thermal controls) into the cells themselves instead of separate external battery management systems — known as a unified cell architecture. 

By breaking, and going below, the $100 per kilowatt hour threshold, VW aims to make the ‘affordable-by-all’ electric car. VW’s Group CEO, Herbert Diess, said “The transformation will be bigger than anything the industry has seen in the last century…it will be fast, it will be unprecedented”. 

Squeezing the last bit of efficiency out of existing lithium-ion technology systems is just the beginning, my next blogs will look at the research and startup frenzy taking place in battery technology and what the future may bring.