Demand and deployment for electric vehicles remains low, but automakers tend to agree that the technology could be the biggest shift in automotive technology since the invention of the automatic transmission.
The problem, of course, that electric vehicle batteries are far more expensive than any conventional powertrain. A brand new four-cylinder engine might cost $4,000, while a hybrid battery pack can cost up to $5,000. Electric vehicle battery packs run upwards of $10,000, which explains why the vehicles they are housed in tend to be more expensive. True, the Chevy Volt costs a little under $40,000, but it also only has an all-electric range of under 40 miles. The Tesla Model S, on the other hand, has over six times the range, but also starts at over twice the price. Of course, part of that is probably all the extra toys you get with the Tesla, but a large chunk of that price is the battery pack, 85 kWh compared to the Chevy’s 16 kWh battery.
To get electric vehicle battery prices down, one could go the route that Tesla Motors is going, forcing prices down by increasing the supply of lithium-ion batteries on the market. The Tesla gigafactory, when fully operational, will effectively double the worldwide production of lithium-ion cells. In turn, this will enable Tesla Motors to produce battery packs much cheaper for electric vehicles and energy storage platforms.
Like Tesla Motors, Volkswagen has a single electric vehicle on the market, producing about 30,000 Volkswagen eGolf annually, with a couple more electric vehicles in select markets and in the future. Instead of boosting production, Volkswagen believes that standardization will help drive down electric vehicle battery prices and increase electric vehicle adoption.
The idea is that lithium-ion cell manufacturers generally make cells in three formats: cylindrical, flat pouch, or prismatic (square). One could make the module fit the cell, such as Tesla Motors has done, or make the cell fit the module. This relationship may have doomed, at least not without significant retooling, Tesla Motors to focus solely on cylindrical cells. It’s not like this has hurt the company in any way, but what about when pouch cells are cheaper than cylindrical cells? Volkswagen decided to go another route, by standardizing the module. The modules are adapted to whatever platform has in mind, and the modules can accept whatever cells happen to be cheapest at the time of manufacture. Basically, Volkswagen will let cell manufacturers underbid each other for the rights to put their cells into Volkswagen’s modules.
In the end, we’ll have to see how this plays out, but Volkswagen seems pretty confident. Might we perhaps be seeing the roots of a new competitor for the upcoming Tesla Model 3?