Navigating the EV Range Boom

Electric vehicles (EVs) have witnessed remarkable progress over the last few years, with substantial improvements in driving range and battery technology. However, as EV ranges continue to climb steadily, BloombergNEF warns of potential challenges that lie ahead for the battery supply chain.
Between 2018 and 2022, the global average range of fully electric vehicles surged from 143 miles to 210 miles, representing a significant 47% increase. The primary driver behind this trend has been the larger vehicles, longer driving distances, and the influence of automakers like Tesla, which have been offering higher-range models. To achieve these extended ranges, lithium-ion battery pack sizes experienced an annual growth rate of 10%, increasing from 40 kilowatt hours to 60 kWh.

This ongoing trend seems promising from an automaker’s perspective as consumers express their desire for more range. However, if left unchecked, this unrelenting rise in range and battery-pack sizes could pose a substantial challenge for the battery supply chain.

BloombergNEF outlines three possible scenarios for the future of EV ranges. In the base case, average EV ranges will plateau in the coming years at around 250 to 310 miles, depending on the vehicle segment, while smaller city cars in markets like China, Japan, and India will remain lower. In the growth scenario, EV ranges will continue to increase by approximately 5% per year until 2030, representing a significant rise but slower than recent years. In contrast, the decline scenario predicts a 2% annual decrease in average ranges from 2025 onward, driven by improved public charging infrastructure and increased price-competitiveness.

BloombergNEF highlights the direct impact of these scenarios on battery demand and raw materials like lithium and nickel. In the growth scenario, battery demand in 2030 could be nearly 50% higher than in the base case and 70% higher than the decline scenario. This surge in demand could lead to a potential lithium market deficit and sharp price spikes, similar to what was witnessed in 2021 and 2022.

To address these challenges, the report suggests several steps for policymakers. Firstly, they should focus on providing purchase incentives for smaller, lower-priced EVs, ideally with a price cap linked to the average transaction cost in a given market. Secondly, governments should invest heavily in public charging infrastructure to demonstrate to consumers that they do not need excessive range and oversized batteries. Widespread and reliable public charging options can help eliminate the inefficiencies of over-buying range, thus reducing the pressure on the battery supply chain.

Even if policymakers are unable to curtail the rising trend, market economics will eventually play a role. As an example, the electric Chevy Silverado equipped with a 200 kWh battery pack represents a significant cost for automakers. With current battery prices, automakers may struggle to make a competitive margin, potentially slowing down the pace of EV adoption until cost-efficiencies are achieved.

In conclusion, while the remarkable growth in EV ranges and battery pack sizes is a testament to the progress of electric mobility, it also poses challenges for the battery supply chain and raw material demand. Policymakers and automakers must collaborate to strike a balance between consumer preferences for range and the feasibility of sustainable battery production to ensure a greener automotive future.

Source: BloombergNEF

The Challenge of Range Anxiety for EVs
Related news

US Electric Vehicle sales hit record highs from 2018 to 2023

The United States electric vehicle (EV) market has witnessed an extraordinary growth trajectory from 2018 through…

read more
Electric Vehicles
Americas
Published by: Editorial board | February 29, 2024

U.S. Commercial vehicle industry poised for battery capacity boost

In an industry where the cost and availability of lithium-ion batteries are pivotal, the U.S. commercial…

read more
Batteries
Americas
Published by: Editorial board | February 28, 2024

Corporate fleets lagging behind in EV adoption

In the push towards a greener future, the transition to electric vehicles (EVs) is paramount. However,…

read more
Electric Vehicles
Europe
Published by: Editorial board | February 27, 2024

Mercedes reclaims title as world's most valuable automotive brand

In the ever-evolving landscape of the automotive industry, brand value serves as a pivotal marker of…

read more
Electric Vehicles
Global
Published by: Editorial board | February 26, 2024