Highly recommended: Green Car Congress: GMs views on challenges for battery development for extended range electric vehicles. Go read it, then come back here for my musings.

I’ve long said that the most important single engineering challenge in electrifying motor vehicles, and, by extension, in our ability to deal with peak oil, is greatly reducing the price of mass produced batteries for hybrids and EVs. Given the current cost of such batteries, it’s not hard to see why this is such a critical issue. A car the size of the Leaf gets around 5 miles per kWh of battery charge, so a 100-mile range requires a 20 kWh battery. While the cost of batteries is one of the great unknowns to those of us outside the industry, I think it’s safe to say they’re somewhere in the range of $200 to $400 per kWh, making that 20 kWh pack a $4,000 to $8,000 item. (I’ve seen public reports that Nissan is buying or making batteries at around $375/kWh, and supposedly Tesla is much lower than that. But I wouldn’t bet on any of the public numbers; it’s probably safe to assume that there’s more than a little gamesmanship involved in what companies say publicly or leak to the press.)

Three details leap out about this situation:

1. Yes, $8,000 is a lot for a battery, but keep in mind that when you build a Leaf (or Focus EV or Fit EV or Mitsubishi iMiEV or …) you’re not just adding an $8,000 battery and the electric motor. You’re also eliminating almost everything under the hood of a conventional gasoline car. Engine, transmission, fuel system, exhaust system — a lot of parts don’t ever make it into the vehicle, which offsets a considerable chunk of that $8,000.

2. I suspect that there’s a small army of exceptionally smart people working around the clock on knocking that cost/kWh figure down a lot and very quickly. Car companies, battery companies, universities, etc., are all in a mad rush to find a path to that dramatic cost reduction. If you follow the energy and automotive news closely, you routinely see announcements about minor breakthroughs, but so far no one has had The Big One. My guess is that someone, somewhere will find the answer, and when it happens it will transform the motor vehicle industry as radically as cell phones did telecommunications.

3. One tricky issue, as always, is scale. Finding a way to make a Wonder Battery work in the lab is the first step. Then you have to be able to manufacture it at much lower cost than current technology. And then you have to manufacture it at a lower cost in very high volume and for extended periods of time, plus deal with recycling and disposal issues. That second step (lower cost) is really tough, but the third one (scaling) is a back breaker, and it probably helps explain why we don’t already have $50/kWh batteries.

I’ve said numerous times that the number one thing I would like to see car companies do is offer customers at least two battery sizes at purchase/lease time, with an option to upgrade to the larger battery size at a slight discount during, say, the first 3 or 6 months. (Customers could still upgrade, but at a higher cost, after that initial period.) This would provide the car companies with a wealth of information about what customers really need and how they perceive their own needs, plus it would lower the barrier to acceptance. If you tell a customer that the ElectroBuggy with a 100-mile battery is $32,000, but the version with a 50-mile battery is $28,000, I’d bet most people will choose to buy the 100-mile version and find it an easier decision than if you offered them only that price and range combination, since they would be explicitly choosing it.

Anyway. The good news is that electric cars are finally arriving as a mainstream alternative. There will certainly be some bumps and surprises in the early days, but that’s inevitable, and we need to get started and go through those growing pains before electric vehicles can make a meaningful contribution to reducing oil consumption and CO2 emissions.