Let us start looking at this debate with something larger in perspective and scope: ICE Vs. EVs. The Internal Combustion engines are known for their drivability and durability. In the United States alone, over 250 million highway vehicles rely on these engines.
These vehicles traditionally used gasoline or diesel as fuel. However, the progress of time, research, and innovation made these vehicles capable of utilizing a range of renewable or alternative fuels, including natural gas, propane, biodiesel, or ethanol. Research and development initiatives have also helped internal combustion engine vehicles become significantly better in their emissions.
R&D endeavors have helped manufacturers reduce ICE emissions of criteria pollutants, such as Nitrogen Oxides and particulate matter, by more than 99%. The ICE performance has also increased with time in terms of the engine’s horsepower and 0-60 mph acceleration time.
While IC Engines keep improving their standards and performance, the EV market is also expanding. A Goldman Sachs report projects the sales of EVs to make up 50% of global new car sales by 2035. By 2040, the penetration of EVs will be 100% in Europe, 85% in the United States, 66% in China, and 62% across the globe.
Transition is evident from ICEs to EVs. However, according to Nicholas Snowdon, the head of metals and co-head of the commodities team at Goldman Sachs Research, the success of the transition would depend significantly on the stuff they’re made of.
“I think the way to frame it is: We’re moving from a fuel-intensive to metals-intensive car.”
– Snowdon
In this transition, one dilemma that needs an effective resolution is the Engine Rebuild Vs. Battery Swap debate.
For that, we need to look into three things: How maintenance differs between EVs and ICEs in the short run, what does maintenance mean for the long run for both these categories, and – finally – how do we improve the scenario by addressing the drawbacks and loopholes that still exist, especially for the EV category that would be the dominant category in the days to come.
EVs Vs. ICE: Day-to-Day Maintenance
IC Engine vehicles require a considerable degree of daily maintenance for their complex powertrain-based structure, which includes engines, transmissions, fuel systems, and exhaust systems. Keeping these components healthy means changing the oil regularly, running frequent fluid flushes, and conducting regular fuel system inspections.
EVs have simpler components like electric motors, inverters, and battery packs. These components reduce maintenance needs by a significant margin. They also do not need frequent oil changes or work related to emission inspection or transmission flushes.
The outcome of this difference between the categories is reflected in a lowered day-to-day maintenance cost compared to ICE counterparts.
EVs Vs. ICE: Long-term Maintenance
The long-term maintenance for ICEs requires considerable work on Brakes and Brake Pads. The continuous friction between the rotors and brake pads causes the brake pads to wear out in the long run.
EVs are free from this challenge because they use regenerative braking that reduces reliance on traditional friction-based braking and, therefore, helps keep the brake pads healthy for longer, resulting in reduced maintenance costs and savings.
But, what remains a challenge for EVs and ICEs is battery maintenance. However, the severity of the challenge is still skewed towards EVs.
For ICEs, the job of the battery is to help the vehicle start and ensure that all of the vehicles are working. Work that needs to be done in ICEs in the area of battery maintenance involves the frequent checking of battery connections, cleaning terminals, and addressing battery-related issues as and when they arise.
For EVs, batteries are the lifeline, and the problem comes when EV battery packs need replacement. This results in exorbitant costs that render the vehicle junk, as it is not worth the replacement. This drastically harms the argument that EVs are better for the environment, as they are essentially disposable.
However, this reality appears to be changing fast as battery replacement costs are coming down significantly. Why? That’s what we will discuss in the segment that addresses how to improve the scenario.
Improving the EV Battery Scenario
A Goldman Sachs report from October 2024 points towards a steady decline in vehicle batteries. The estimate says that the prices will fall by almost 50% by 2026.
If we look at the trend, the report says that global average battery prices declined from $153 per kilowatt-hour (kWh) in 2022 to $149 in 2023. According to Goldman Sachs research, the prices will fall to US$111 by the end of this year. By 2026, it could become around $80/kWh, which would be a nearly 50% drop from the 2023 levels.
This would mean that battery electric vehicles would achieve ownership cost parity with gasoline-fueled cars in the US on an unsubsidized basis. If we go further, the prices will drop more.
Goldman Sachs’ October 2024 report puts the estimated pack price in 2030 at $64/kWh. However, other estimates even go below this number. For instance, for 2030, RMI estimates a cell price of US$32-$54/kWh.
From these projections, the question that must come to every reader’s mind is, what are the factors that lead to such a drop in battery prices for EVs? In the following segments, we discuss these factors, the ones that are the most decisive of them all.
Innovative and Superior Battery Tech
Nikhil Bhandari, the co-head of Goldman Sachs Research’s Asia-Pacific Natural Resources and Clean Energy Research, was asked why the EV battery prices were coming down faster than expected. Bhandari started by pointing out tech innovations that were happening to the structure of the batteries. As the cells were getting bigger and battery developers were eliminating many modules inside and directly doing cell-to-pack, the battery structure was becoming more simplified with costs cut and the energy of the battery increased simultaneously.
Technologists are also working towards developing a streamlined process for EV battery recycling. The World Economic Forum expects roughly 600,000 metric tons of Li-ion battery waste from EVs by 2025 and as much as 11 million metric tons worldwide by 2030.
Traditionally, the recycling of EV batteries is done component-wise. The value of a recycled EV battery is determined by the individual components’ value. And these recyclers deploy three major recycling processes: hydrometallurgical, pyrometallurgical, and direct.
However, some new technologies are emerging. Researchers are developing one such technology for dissolving binders. Tesla’s batteries, for instance, come with the nearly indestructible polyurethane cement that binds them together.
Dissolving them requires highly toxic solvents. Some of these solvents are so toxic that the EU has severely restricted them, and the US is considering a similar ban. However, to ease this process and make the recycling of such batteries more convenient, researchers are urging battery makers to start designing their products with recycling in mind.
Interestingly, the Chinese EV maker BYD has come up with a battery that does not require binders at all. The Blade Battery by BYD works as a lithium ferro phosphate battery pack that does away with the module component, instead storing flat cells directly inside. The cells can be removed easily by hand, without fighting with wires and glues.
There are innovative platforms that have come up to make the process of EV battery recycling glitch-free. For instance, there are platforms like Call2Recycle that match EV Owners with recyclers.
According to Leo Raudys, the CEO of Call2Recycle:
“Education and accessibility are two of the most effective tools to ensure safety, especially as batteries grow in physical size.”
While technology is helping in different ways to make battery tech more efficient, the materials management of EV batteries is also getting more efficient each day.
Improved Material Management for EV Batteries
The leading battery types are lithium-based. While one category leverages nickel chemistry, accounting for close to 60% of the market for different types of nickel batteries, the other leading type, lithium ferro phosphate, is iron-based. This second category occupies close to 35-40% of the market, leaving very little portion of sodium ions.
The materials required for these batteries are increasingly becoming more conveniently available. For instance, there was a cobalt deficit of 8,000 mt in 2021, according to S&P Global Commodity Insights research. As mining companies started ramping up production to meet demand from the electric vehicle sector, the cobalt market recorded a surplus of 3,000 mt in 2022.
The result was a decline in cobalt prices, leading to a significant cost reduction in EV battery manufacturing. Between April 2022 and December 2023, the price of Cobalt came down from over US$82,000 to less than US$33,500 per metric tonne.
The total global supply of lithium is also expected to increase by a significant margin. The total global supply of lithium amounted to more than 634,000 metric tons in 2022. By 2030, it is projected that the world’s lithium supply will increase to more than 2.14 million metric tons.
An increase in the supply of raw materials that are crucial for high-performance EV battery manufacturing will surely bring down the cost of producing batteries.
Apart from researchers and technologists working across universities, there are private EV manufacturing companies that are investing heavily in battery innovations. And one company that has been doing it pioneering fast is Tesla (TSLA -1.58%).
Click here to learn all about safety and associated risks of lithium batteries.
1. Tesla (TSLA -1.58%)
Tesla’s Model 3 claims to have one of the most sophisticated battery systems in the world. The Model 3 battery is such that when it is not being driven, the Battery discharges very slowly to power the onboard electronics. The Battery can discharge at a rate of approximately 1% per day, though the discharge rate may vary depending on environmental factors (such as cold weather), vehicle configuration, and the settings selected on the touchscreen.
Tesla has introduced an energy-saving feature in its cars that reduces the amount of energy being consumed by the displays when Model 3 is not in use. On newer vehicles, this feature is automated to provide an optimal level of energy saving. However, on older vehicles, the user can control the amount of energy being consumed by the displays by touching them.
According to available reviews of the Model 3 battery pack, Tesla’s vehicles are equipped with an efficient battery pack that maximizes range and durability. It has a cell capacity of nearly 57.5 kWh, offering an EPA-estimated range of 263 miles per charge. The Model 3 long-range battery comes with a size of about 75 kWh, inspiring an impressive EPA-estimated range of up to 353 miles on a single charge.
According to news published in early October, Tesla has plans to introduce four new types of 4680 batteries in 2026. These four new batteries have the following code names: NC05, NC20, NC30, & NC50.
The NC05 battery cell will be the easy-to-manufacture cell that will power the Cybercab and will likely also power the lower-cost $25,000 model. NC20 will power Tesla’s SUV lineup and the Cyber Truck. This will come as a larger-format cell that helps move larger and heavier vehicles.
Reportedly, the NC30 and NC50 are the two cells that’ll be drastically different. They won’t be using the standard cell materials that we’ve seen used up to this point. The expectation is that the company will introduce cells using silicon carbon into the anodes. Silicon Carbon, or SiC, can hold and move electrons faster than traditional anode materials.
Industry experts believe that NC30 will be used in the Cybertruck and Tesla’s SUV lineup, while NC50 will focus more on performance and offer a smaller-sized cell. These batteries will power the Tesla Roadster and other performance models such as the Plaid, Performance, and Beast.
Tesla, Inc. (TSLA -1.58%)
According to the latest available financial report for Q3 2024, the company earned total automotive revenues of more than US$20 billion. It was a marginal increase from the previous quarter’s US$19.878 billion and a notable increase from the first quarter’s US$17.3 billion.
The Future of Automotives: Cost-Effective Durability
The transition from ICE to EVs is underway. The EV segment will keep innovating to improve its battery standards, making its batteries more cost-efficient and easy to replace and recycle. However, the changes will not happen overnight. The battery dilemma will take some time to come to an optimized solution.
According to David Leah, Senior Analyst at GlobalData’s Powertrain team:
“It’s not going to happen overnight, and there remain several risks that could slow the transition down. That said, considering external and industry trends, the shift to zero-emission vehicles seems inevitable.”
According to Jordan Roberts, a battery raw materials analyst at Fastmarkets, the Go Zero Charge survey, conducted among 1,200 UK adults, found that more than 93% of UK adults would not go back to driving an ICE vehicle. According to Roberts, This points towards an inflection in our journey from ICEs to EVs. In his own words:
“We have reached a tipping point in the move from combustibles to electric vehicles.”
According to John Ellmore, Editor of Electric Car Guide:
“Solid-state batteries represent the next frontier in battery technology, offering numerous advantages over traditional lithium-ion batteries. With higher energy densities, they promise longer driving ranges, addressing one of the key consumer concerns about EVs – range anxiety.”
Toyota is one company that has made significant improvements in this frontier. The company recently announced a new battery electric vehicle factory that will begin production of new models in 2026. These models will use Toyota’s solid-state lithium-ion batteries, which have a solid electrolyte to enable the faster movement of ions, supporting rapid charging and discharging.
Altogether, the future will thrive on innovation and newer technologies that will enable a super smooth progression in the domain of Electric Vehicles, making them more convenient, easy to sustain, and cost-effective.
Click here for a list of top ten EV stocks.
