Although electric vehicles (“EVs”) are slated to replace internal combustion engine (“ICE”) vehicles as part of global efforts to reduce greenhouse gas emissions, a couple of factors prevent mass EV adoption. The chief obstacle to the widespread adoption of electric vehicles is price, with most EVs being way far too expensive for the average driver.
The lithium-ion battery packs that power these alternative energy vehicles are responsible for their high prices, costing up to one-third of an EV’s total price. Consequently, reducing EV battery prices without compromising their energy density and safety is vital if electric vehicles are to become affordable enough for mass adoption.
But why are electric vehicle batteries so expensive?
On average, an EV battery pack will cost around $6,300. While battery prices have been steadily decreasing over the past decade, coming down 89% in the past decade, reports Bloomberg NEF, they still haven’t hit the threshold of affordability. Back in 2019, the price per kilowatt-hour for EVs was $1,191, and it has dropped all the way down to an industry average of $137 per kilowatt-hour. Conversely, fossil fuel-reliant vehicles are at a $100 threshold, meaning EV makers still have a ways to go before electric vehicles can cost the same or even less than conventional cars.
This milestone will be achieved by finding less costly raw materials. An electric vehicle runs on the same lithium-ion batteries as the ones in your mobile phone and laptop, only tons of these battery cells are grouped into large packs that can deliver enough energy to propel an EV. Like all batteries, the individual cells consist of an anode, a cathode and an electrolyte. The cathode is the most expensive component in the battery and contributes a great deal to the vehicle’s overall price as it requires raw materials that can consistently store and release a large amount of energy.
These raw materials include metals such as lithium, cobalt, nickel and manganese, which are quite rare and costly to mine and refine. Additionally, most of the batteries in the world are processed in China; Chinese firm Contemporary Amperex Technology Co. Ltd is the largest producer of batteries on the globe, supplying nearly a quarter of the market’s total inventory. South Korea’s LG Solution is the second-largest producer followed by Japan-based company Panasonic Corp. Panasonic’s joint venture with Tesla is the most prominent battery producer in America.
As the race towards total electrification rages on, battery makers, EV startups such as Tesla and established automakers have invested billions into developing a more affordable electric vehicle battery. Contemporary Amperex Technology is working on a sodium-ion design that would be cheaper and less likely to catch fire while American firm QuantumScape Corp. is developing a solid-state battery that may revolutionize the electric vehicle space.
Entities such as DSG Global Inc. (OTCQB: DSGT) have already thrown their hats into the ring as contenders for the leadership role in distributing EVs, and their efforts are likely to get a new lease on life once battery tech matures and electric vehicles become more affordably priced.
NOTE TO INVESTORS: The latest news and updates relating to DSG Global Inc. (OTCQB: DSGT) are available in the company’s newsroom at http://ibn.fm/DSGT
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