How to Reduce the Cost of Electric Vehicles

Reducing the Cost of EV’s

We’re talking Electric Vehicle ticket price.

That’s new EVs hitting the streets, to the benefit of us all at lower prices.

Because if we don’t, well it’s just plain unsustainable without “Big Government” stepping in to subsidize!

There’s of course the macro that is driven by ‘economies of scale’ and that’s aligning the ticket price with that of an ICE, which combined with the lower cost of ownership (fuel – or lack of and servicing – less!) will help bring the volumes to bring down the prices.

However, reaching these outcomes requires continued market expansion and more competition leading to innovations in design and manufacturing. But all that will depend on overcoming remaining obstacles by expanding and sustaining government policies & incentives such as restrictions on ICEs, EV purchase rebates, investment in the re-charge infrastructure.

But, when all said and done, for EVs to succeed, not only do we the consumer have to want the product, but it has to be at a price we can afford together with that being profitable for the automotive firms. That’s reducing that cycle-time and overall cost of Design & Manufacture.

In this blog we’re discussing strategies to lower electric vehicle (EV) costs, emphasizing the need for economies of scale and market competition to make EVs affordable without heavy government subsidies. It highlights the challenge OEMs face in making a profit from EVs due to high battery costs, but notes potential savings through advancements in battery technology and more efficient vehicle design.

OEM ROI From EVs

Today, most OEMs do not make a profit from the sale of EVs. In fact, these vehicles often cost $10,000+ to produce than an ICE in the volume markets of small to midsize cars and the small-utility-vehicle sector. You wonder why the big OEMs have been slow to respond?

Many appear to be resigned to this and initially battled against electrification and now under market pressure are endeavoring to respond.

Electric Vehicle Battery Costs

Battery costs are the largest single factor in the pricing of a car. As industry battery prices decline, the economics of EVs should shift. Current thinking is the industry will grudgingly absorb losses in order to not be totally left behind. However, from the experts I talk with, there’s some alternatives.

Reducing EV Battery Prices

Of course, this is already happening and you’ll find many reports talking of 13% reductions in 2019 from the year before as demand increases. However, there are various other factors in play;

There is of course the concern over where the materials that make up a battery are sought, especially cobalt. One of the most popular locations is the Democratic Republic of Cingo and having spent a little time there a few years ago, it needs cleaning up in terms of its human rights practices!

The good news is cobalt has strong recycling abilities. In fact 100% recyclable

Electric Vehicle Battery Materials

Second, battery technology is continuing to improve. Lithium-titanate and lithium-iron-phosphate, for example, are gaining importance in the EV market and don’t need cobalt.

They should bring down prices to $80/kWh ahead of predicted schedules. They add range, bring the potential of the much talked about 1 million mile battery and provide the potential of even power storage over the even longer-term.

The suspicion is Tesla’s Battery Day (Sept 15) will announce the Lithium-iron phosphate 1,000,000 mile battery! and in so doing drive down the price of the battery. Let’s see

Electric Vehicle Battery Performance

Then how about daily performance of the battery?

We’re familiar with battery performance of our computers cell phone, tablets and generally now laptops. We expect them to last a day, but despite frequent promises of longer, we’re used to just putting them on charge each night. Why not for our cars?

The average vehicle-miles traveled for our urban population is around 20 miles/day (in the US), and up to around 30 miles/day when factoring in other demographics. If we blend the two for suburban and occasional rural travel, the optimal battery capacity is approximately 40 kWh, which is around 160 miles. Thereafter, for the occasional long-trip, with an enhanced re-charge infrastructure, we’re looking at a more moderate battery, saving perhaps $2000 per vehicle!

Vehicle Design Optimization

The EV start-up begins from a different starting position. To some. you may think it’s from behind, but to many it’s joining the race at a different place. They come from a place without baggage – legacy systems, legacy data, an old mindset that starts with design around legacy. The EV start-up begins with the battery and builds design upon that.

OEMs can reduce their EV costs by several thousand per vehicle through the pursuit of strategic de-contenting paired with a dedicated EV platform. Meanwhile the EV start-up has the chance to use digital/virtual design to make one of the biggest impacts.

EV Design – Learning From Start-Ups

So, back with the big OEMs – they can take lessons from the start-ups where they appear to take a different approach to the interiors, electrics and overall body design. The start-up comes from a battery and software architectural efficiency perspective 1st. They eliminate extra displays, buttons, switches, wiring, modules, and unnecessary structural components, as well as reducing the overall design complexity. It delivers major savings.

However that being said, it starts with a dedicated EV Platform that enables better design flexibility, layout and space. These include using more basic vehicle electronics with fewer powered options, straightforward body styling and lighting, uncomplicated seat designs, and simplified interior trim.

Despite higher up-front costs, care of engineering hours, new tooling, and so on, native EV platforms have proved significant benefits over non-native models in multiple ways.

Designing the vehicle architecture entirely around an EV concept, without combustion-engine legacy elements, means fewer compromises and more flexibility.

As native EVs have to compromise less, particularly in their architecture and body in white, they can accommodate a bigger battery pack, which in turn brings a higher range.

A good indicator of the increased level of architectural efficiency is the design of the electric cables connecting the main elements of battery, e-motor, power electronics, and thermal-management. The improved architectural brings critical elements located much closer together and in so doing reducing weight and the number of parts.

Reinventing the Sales Strategy for EV’s

If they look at a D2C model (Direct to Consumer) approach, they strip 10% of cost. We’re all looking to move online and with the ever improving AR/VR world approaching an immersive buying experience is possible without the need for an extensive dealer network. Maybe the EV is the ideal opportunity?

EV: Total Cost of Ownership

The TCO (Total Cost of Ownership) is better. For instance, spending an extra $20 per month in finance/lease payments compares with saving around $60 per month in fuel and maintenance costs. And it only get better when applied to a driver exceeding 35 miles/day.

Lowering EV Costs with XDInnovation

In conclusion, the journey to making electric vehicles more affordable and accessible is complex but achievable. By harnessing economies of scale, technological advancements in battery efficiency, and innovative vehicle design and sales strategies, we can pave the way for a sustainable automotive future. The role of companies like XDInnovation is pivotal in this transition, offering insights and solutions that bridge the gap between current challenges and future possibilities. For those looking to dive deeper into the nuances of EV cost reduction and to explore cutting-edge solutions that drive the automotive industry forward, reaching out to XDInnovation can provide the expertise and support needed to navigate this evolving landscape.