Electric vehicles (EV's) are becoming an increasingly popular and competitive option for clean transport. When using renewable-based electricity they offer significant opportunities to reduce local and global pollutant emissions. The key challenge is to rapidly reduce the costs of battery packs, improve their energy density and expand the recharging network. Although EVs are only just being deployed as mass-market vehicles, some offerings by certain manufacturers already look close to competitive with conventional internal combustion engine (ICE) powered vehicles.
As battery costs continue to decline, the viability of electric vehicles will only increase and EVs will become the least cost option for a wider range of car owners and driving patterns.
EVs that rely 100% on batteries for energy require larger battery packs than plug-in hybrids (PHEVs). However, compared to PHEVs, the pure EV battery packs are cheaper per kWh due to less demanding operating requirements, meaning that incremental costs do not increase proportionately compared to a PHEV with an equivalent battery size. EV battery packs were estimated to cost around USD 500–800/kWh in 2012, with average battery cell costs of approximately USD 400/kWh.
IRENA's analysis indicates that cost reductions by 2020 could be significant, placing future battery-pack costs in the range of USD 300–400/kWh. Assuming battery costs decline to USD 350/kWh for EVs, the cost of battery packs could fall by USD 5 500 per vehicle (for a 23 kWh pack) or more for larger batteries. At the same time, improvements in battery performance should see vehicle ranges increase. By 2020 EVs could therefore become competitive with conventional vehicles for a wide range of driving patterns in urban areas.