
The economics of cheaper batteries - vanburen
https://arstechnica.com/features/2020/05/the-story-of-cheaper-batteries-from-smartphones-to-teslas/
======
baybal2
Not sure where Boomberg is getting its digits.

Wholesale price for LFP cells in China has been stably below $100 per kwh for
like 5 years.

The only problem is getting to those wholesale quantities.

All major LFP cell makers seem to run a cartel to cut off small distributors
from preferential pricing. Anything you can buy in small wholesale is at least
2x the price of what companies making EVs are getting.

Once upon a time good offers like these
[https://item.taobao.com/item.htm?id=599076665397](https://item.taobao.com/item.htm?id=599076665397)
come up, and then vanish.

~~~
jillesvangurp
It's not a cartel or conspiracy but a simple matter of demand being
consistently larger than the available production capacity. Right now owning a
battery factory is a good business because there are a lot of manufacturers
that are not able to secure batteries. Several car manufacturers are being
blocked by this or have reduced their production ambitions because of this.

I think people are also confusing manufacturing cost vs. price here.
Obviously, those are not the same. The article is mostly talking cost.

The packaged products that e.g. Tesla sells (cars, battery packs for
domestic/grid usage, etc.) include more than just the battery cells.

In any case, Bloomberg is being a bit vague. On one hand, they are predicting
mid 2020s for the cost to drop below 100$ and on the other hand you have
people guestimating that Tesla is close to that right now. You could of course
argue average price, i.e. other manufacturers are not there yet.

Demand for batteries is going to continue to increase for a while. Tesla is
talking about TW factories now. The giga in giga factory used to refer to GW.
That's a good indication of what they are planning to do. At that scale, the
average industry cost and their cost are going to be very similar unless
others also grow production capacity at the same pace.

~~~
Ajedi32
> The giga in giga factory used to refer to GW. That's a good indication of
> what they are planning to do.

Haha, I never thought about that. That's actually a really clever way of
quantifying the output of a battery factory. Battery capacity can be measured
in watt-hours, so battery factory output could be measured in watt-hours of
battery capacity produced over time, and power*time/time just reduces back to
power (measured in watts).

Therefore, you could say that a factory which produces an average of 1
Gigawatt-hours of battery capacity every hour is producing 1 Gigawatt of
battery capacity. I like it.

And yeah, a TW factory sounds like it'd be operating on a pretty ridiculous
scale if it lives up to its name.

~~~
MagnumOpus
Since world electricity production is about 3TW, a battery factory with TW
capacity would saturate the world’s charging capacity within three years? (In
other words, way too big even for the world’s entire battery needs...)

~~~
toomuchtodo
Musk is quoted as saying you need 100 Gigafactories. I think there’s room for
error, considering the batteries needed to replace all ICE vehicles with EVs,
the amount of utility scale battery storage needed to go 100% renewables, and
any storage needed beyond those two primary use cases. GF1 in Sparks is also
producing above anticipated capacity.

------
dmix
Vandium Redox Batteries [1] sound like they have a bright future, I recently
came across a startup building home kits which have a significantly longer
lifespan than Tesla Powerpacks (allegedly):

[https://www.startengine.com/storen-
technologies](https://www.startengine.com/storen-technologies)

There's a huge plant being built in Dalian, China with 200MW/800MWh with
Vanadium (for comparison Tesla Australia plant is 129MW/100MWh with Lithium-
ion with plans to double scale this year, but currently only powers 30k homes
which isn't much)

[https://electrek.co/2017/12/21/worlds-largest-
battery-200mw-...](https://electrek.co/2017/12/21/worlds-largest-
battery-200mw-800mwh-vanadium-flow-battery-rongke-power/)

Wikipedia has a nice list of largest battery deployments in the world:

[https://en.wikipedia.org/wiki/List_of_energy_storage_project...](https://en.wikipedia.org/wiki/List_of_energy_storage_projects)

[https://en.wikipedia.org/wiki/Vanadium_redox_battery](https://en.wikipedia.org/wiki/Vanadium_redox_battery)

~~~
gandalfian
Redflow of australia actually makes zinc bromide flow batteries now. It has
not been a financial success to put it mildly... Much as I like the idea of
flow batteries I think their window of opportunity may be closing.

~~~
marcosdumay
You mean flow batteries in general or just vanadium redox? Because if it's in
general, why would you think its opportunity window is closing?

Closed batteries have no inherent advantage on large scale stationary
projects, only problems. The only gain they bring is that you can ride on the
scale of mobile applications.

~~~
snovv_crash
I'm waiting for the old car batteries to start coming online, I think that
will kill anything else for stationary systems, and will just get bigger.

~~~
battery_cowboy
You can't discharge and recharge a lead acid car battery very many times
before it loses capacity.

~~~
snovv_crash
I didn't believe it was necessary to specify this, but I meant Lithium car
batteries, not lead.

~~~
battery_cowboy
Ah, sure, that makes more sense. I have to retrain myself to think of "car
batteries" as something other than a heavy, plastic box of acid.

------
csours
A kilowatt hour of car battery pack costs ~$150 now. I was looking at battery
powered lawn mowers last night, and noticed that a 0.42 kWh battery pack costs
$350[0]. I know that power tool batteries have different requirements than car
battery packs, but that base .42 kWh should still be under $100.

I feel like this is the printer/razor model, where you sell the base item for
cheap, but the consumables cost are extreme.

Although, for long lasting durable goods, you have to make money somewhere, as
a good battery mower may last a very long time.

0: [https://community.egopowerplus.com/ego/topics/kilowatt-
hours...](https://community.egopowerplus.com/ego/topics/kilowatt-hours-kwh-
required-to-fully-charge-the-5-ah-battery?topic-reply-
list\[settings\]\[filter_by\]=all&topic-reply-
list\[settings\]\[reply_id\]=20372921#reply_20372921)

~~~
mdasen
I think there's a combination of things here, but it's not the printer/razor
model. You just don't have to replace the batteries frequently enough for that
model. The battery pack should last for years. If you can cut your lawn in one
charge and you cut it once a week, you should get around a decade out of it
(assuming 500 charge cycles, LiIon batteries are usually 400-1,200 cycles).

The battery you're looking at isn't just shrink-wrapped cells. I've seen 1-kWh
e-bike batteries around $150 on AliExpress (shipped from China) that are just
shrink-wrapped cells with a cable coming out where you're supposed to be
knowledgable enough about batteries to make sure you use it safely and not
catch on fire and such. This is in contrast to nicely packaged batteries that
cost significantly more (like $800 for 1kWh at Luna Cycle).

This battery is available when you want it (rather than shipped from China
with a month wait), you're paying for the retail availability and
service/support/returns, you're paying for knowing that the cells are likely
reputable cells from a major manufacturer like Panasonic, LG, or Samsung, and
you're maybe paying a little for the fact that it's a product-specific
adaptation to fit the lawnmower.

However, it doesn't look like they're marking you up much at all. E-bike
batteries are a good comparison here. E-bike batteries are a relatively
competitive market and the pricing sounds about right for something that's
supported, has US distribution, decent quality, not a fire hazard, etc. - $350
for 420kWh. It doesn't really sound like you're getting over-charged. If you
want a battery from a well-priced but reputable source, it's not $150 per kWh
for batteries of this size. It sounds like they're charging you about what
batteries of that size go for. You can certainly search around for ebike
batteries and see that despite their being a competitive market there, you're
not paying $150 per kWh. Doing a little searching, I can see 1 kWh for $800,
850 Wh for $620, 900 Wh for $600, etc. On Alibaba, I can see some cheaper
things, but we're still talking $230 for 600 Wh, $400 for 900 Wh and who knows
when they'll arrive or what quality they'll be. The lawn mower company might
have a little margin on you, but they aren't over-charging a lot. From what
I've seen for US-source e-bike batteries, it's pretty much in-line with my
expectations. I've seen 420 Wh batteries a little cheaper (like $275 is the
cheapest I've seen) which is cheaper, but you're looking at a slightly more
niche product (a battery for a specific lawnmower) and likely looking at a bit
more retail markup (like a big box store vs. a no-name online retailer), etc.
$350 is pretty competitive and you're going to need to spend it once a decade
so the possible $75 margin doesn't seem like much at $7.50 per year.

I mean, you could maybe buy an e-bike battery and get it to work with the
lawnmower, but I don't see e-bike batteries that are that much better for
pricing. I mean, if you buy the lawnmower and it lasts you a decade and you
love it, I don't feel like a $75 markup for a second decade on it feels like
taking advantage of you. That just feels like retail markup and, frankly, I'd
probably trust Luna Cycle more than the retailer I'd never heard of with the
$275 420Wh battery. Luna's $460 650 Wh battery would cost the same as a $298
420 Wh battery, assuming the same price per Wh. $50 just doesn't seem bad.

~~~
michaelt
I can look at a tool store catalogue right now, and for a 18V 4Ah lithium
battery the cheapest brand is half the cost of the most expensive brand. In
that case, factors like retail availability are identical - but the price
difference persists.

It's pretty well known that power tool buyers have to watch out for battery
prices.

~~~
toasterlovin
I can tell you as someone who sells products to the public that price is one
of the primary drivers of sales. If there was a way for the higher quality
manufacturers to cut their sell price in half, they would do that. But that
they have decided to go into the market with a price that is 2x the cheapest
competition tells you that they have very good reason for doing so.

~~~
econcon
I've also served on company boards which believed "if the product is cheaply
available then it will be considered low quality by the end user regardless of
how much better it is in comparison to the competitor, so we must not drop the
price and keep our margins high, take out more in profits".

They also say, "competing on price is for losers, it's race to bottom and at
the end we'll have no margins left"

~~~
imtringued
You can only charge more if your product is actually better in some way.
However, a lot of companies are willingly sacrificing their trusted brands for
a quick buck by lowering the quality that made the brand attractive in the
first place.

------
gandalfian
I'd say home storage is about $750 a kWh in the UK. Plus installation. What do
you think, is the future a domestic 50kwh battery in every house or will they
be fewer giant ones owned and run by the power company out of sight?

~~~
marvin
Well, Tesla currently sells a 50kWh battery that also happens to have a really
nice car attached to it for $35000.

That’s $700 per kWh. It stands to reason that home charging systems will soon
come down in price, even if they don’t end up largely being eaten by BEVs with
bidirectional charging ;)

~~~
briffle
They sell a 13Kwh powerwall for $6500. That is down to $500 per kWh. Still not
great.

------
npongratz
Higher demand causes lower prices? From the article:

> "But a battery electric car needs so much battery capacity—40 to 100 kWh,
> thousands of times more than a smartphone—that they've significantly
> increased the global demand for lithium-ion batteries. That has helped drive
> additional price declines, which have started to make it cost-effective to
> use batteries to improve the electric grid."

You need to know both demand and supply to forecast price effects when either
or both change. The simplistic assertion that higher demand leads to lower
prices is wrong on its face.

I'm no expert, nor an economist, but I think it'd be more correct to say that
higher demand inspired investments that resulted in more supply, which grew
faster than demand, thus driving price declines.

EDIT: Another inconsistency that bugs me:

> "Frith told Ars that a common battery technology in the last decade was "NMC
> 111" batteries with equal parts nickel, magnesium, and cobalt. Now companies
> are starting to move to NMC ratios of 811—with eight times as much nickel as
> manganese or cobalt. Nickel is two to five times cheaper than manganese or
> cobalt, so a formula with more nickel is cheaper to produce per kg."

So does the "M" in NMC refer to magnesium (as stated first), or manganese (as
stated second)?

~~~
crazygringo
_Over the long run_ , higher demand can absolutely lower prices.

In the short-term, obviously higher demand increases prices if production is
held constant.

But if there's no obvious constraint on production (e.g. on
resources/land/employees/etc.) then yes, over the long-term higher demand
usually generates larger-scale businesses/factories which can invest in more
efficient production and produce lower prices, and pay off initial
investments.

Of course, this won't apply if there aren't further economies of scale or
investments to recoup.

The article seems to be quite clear that this is what it's talking about. I
don't think it's making the "simplistic assertion" you're assuming it is --
it's just referring to the concept of economy of scale which most people are
familiar with.

------
tuatoru
Somewhat surprisingly, perhaps, there is still potential in lead-acid battery
technology. Ecoult [1] is combining them with supercapacitors to try to get
the best of both technologies for grid-scale storage.

[1] [https://www.ecoult.com/](https://www.ecoult.com/)

------
AtlasBarfed
That article was somewhat disappointing, but maybe I've been watching too much
Tesla battery investor day hype.

Between the tabless design patent, the maxwell dry electrode, and other
chemistry improvements, I'm interested to see what the battery presentation
boils down to in terms of improved density from the dry cathode and cost
improvements from tabless and the various chemistries discussed.

That million mile reliability is nice, but I'm really hoping for under
100$/KWhr at pack level with improved density to enable 400+ mile ranges.

The Tesla prototype around the Nurburgring had me speculating about really
dense batteries that enabled a much lighter racing car than what the Taycan
was limited by.

~~~
_ph_
For cars, price and density are very important, and Tesla will certainly
improve in those specs too. But for energy storage, longer durability directly
translates into an effectively lower price. As power companies often invest in
the scales of several decades - a power plant often can be run for 5 decades -
the costs are calculated over those time spans.

~~~
AtlasBarfed
Reuters is predicting an $80/KWhr pack cost announcement.

Probably the cobalt-free ones that don't have great density, but still, for
the 200 mile range car that's doable.

------
raphaelj
Is the durability of batteries also improving?

Having a significant improvement in this area would have a magnificent effect
on some industries. Making batteries last twice as long (e.g. from 2000 cycles
to 4000) would basically reduce battery cost by a factor of 2 for trucks,
public transport or grid energy storage (6y to 12y lifespan if cycled once per
day).

------
peter_d_sherman
>"In 2010, a lithium-ion battery pack with 1 kWh of capacity—enough to power
an electric car for three or four miles—cost more than $1,000. By 2019, the
figure had fallen to $156 [...]

Forecasters project the average cost of a kilowatt-hour of lithium-ion battery
capacity to _fall below $100_ by the mid-2020s."

------
WalterBright
60 Minutes once did a segment on batteries made from seawater and dirt. They
were large (low power density), but very cheap, and perfect for grid storage.

Haven't heard anything about that since.

~~~
pengaru
Neither seawater or dirt sound like they address the anode or cathode, which
seem to be pretty major challenges when it comes to rechargeable batteries.

BTW, speaking of seawater and dirt forming a battery, I recently needed a way
to measure underground corrosion of buried copper pipe, and it went down a
great little rabbit hole uncovering documents such as this [0]. It was fun to
go put a voltmeter across various ground-coupled conductors in my home to see
what, if any, voltages were present, with the earth serving as part of a
battery.

[0]
[https://archive.org/details/CAT78694105](https://archive.org/details/CAT78694105)

------
cinquemb
Li-ion… meh

------
mattbk1
> Batteries have already gotten six times cheaper within the last decade,

Pedant here:, but you can't get "six times cheaper." You can get one-sixth as
expensive, but "six times cheaper" implies some sort of relative comparison
being made about rates, not absolute values.

The same issue is apparent in the HN title ("costs fell six-fold."

~~~
X6S1x6Okd1st
IMO In colloquial English six times cheaper means 1/6th the price. What a
phrase means is very much dependent on how the speaker and the listener
interpret it.

------
zpeti
As far as I know so far most of the lithium used has been from existing copper
mines, where there's a lot of lithium, so that's made pinpointing it and
extract it fairly cheap. I remember reading there's 5-10 years worth of
lithium left in these mines. It will be interesting to see what happens once
we need to start looking for new sources again.

~~~
marcus_holmes
The next "iron ore boom" in Australia is supposed to be lithium. There's a lot
of deposits waiting to be commercialised apparently.

Just waiting for some other country to start building enough battery
factories. Because actually making anything in Australia seems to be
impossible.

~~~
ksec
> Because actually making anything in Australia seems to be impossible.

I keep hearing that. Could you expand on this bit? For those of who are are
far away and have zero idea why. While I know labour cost and protection are
high. I would have thought battery factory is now highly automated.

~~~
marcus_holmes
More a mindset than economics. Mining is what Australia does. No-one really
knows how to set up a manufacturing base. Investors aren't willing to invest
in it. There's no end of stories about how it's too small of a domestic
market, and too far from export markets (all of which are true for lots of
other countries with thriving export markets), or that the labour costs are
too high (also true for Germany, which has a thriving manufacturing export
industry). And everyone's rich from mining, so why bother?

Same for the solar industry. If there was ever a place to build enough solar
to power the planet, it's Western Australia. We could build the batteries,
too, from local ingredients. But it's all too hard and too complicated and why
do that when we can make enough money from just mining the lithium?

~~~
X6S1x6Okd1st
Wouldn't you be killed in this distribution part of the solar power for the
world story?

What form would you be shipping the energy in?

~~~
shoo
> What form would you be shipping the energy in?

One option is hydrogen. There's some amount of government & think-tank
produced research arguing for australia to pursue a "hydrogen economy". E.g.
[https://www.industry.gov.au/sites/default/files/2019-11/aust...](https://www.industry.gov.au/sites/default/files/2019-11/australias-
national-hydrogen-strategy.pdf)

From skimming through the report, there are also applications to use directly
use hydrogen as an input to produce ammonia, and also an argument that
existing means of shipping ammonia could be used to ship hydrogen, conditional
on research that can extract hydrogen out of ammonia with low energy input.

I don't have a handle on what kind of policies would be needed to encourage
private investment in hydrogen vs coal, gas, oil (assuming it is even a good
idea). There's a graph of estimated prices of hydrogen vs alternatives in
various uses in the report (search for "breakeven"). It does not look price
competitive in many applications, but I assume the comparison does not include
price adjustment that account for the externalised environmental costs of one
energy source versus another.

Regardless of hydrogen or solar or batteries or whatever, a carbon tax with a
price set to help internalise the externalised costs of greenhouse gas
emissions would be a great way to push activity in a better direction,
regardless of if that is hydrogen or anything else that strikes a good
combination of efficiency & low greenhouse gas impact. Perhaps the carbon tax
could be rolled out nationally with tariffs put in place to penalise the
import of goods & services produced in other countries that did not yet have
an comparable carbon tax installed.

------
lcam84
We have a systemic problem, our economic system is based on productivity and
that is a opposite goal to efficiency. Every time we gain efficiency we have a
choice of keep our consumption and pay less for electricity but we choose to
increase consumption, for instance any improvement in phone batteries is
counter by more powerful chips. Home appliances have improved but we choose to
have more appliances instead of less energy consumption. This is called jevons
paradox [1] and it needs to happen otherwise there is no profit or job
creation.

[1]
[https://en.wikipedia.org/wiki/Jevons_paradox](https://en.wikipedia.org/wiki/Jevons_paradox)

