What impact will the development and cost of various types of batteries have on the emerging market for electric cars? How much progress can we hope to see in the next decade, and what critical barriers will need to be overcome along the way?

The automotive industry’s quest to limit its impact on the environment and transform automotive mobility into a sustainable mode of transportation continues at high intensity, despite the current economic crisis. In an earlier report, we analyzed the technical and cost tradeoffs of competing alternative power-train technologies. In this companion piece, we address the two principal variables in our analysis of the developing market for electric cars: the technical attributes and the costs of lithium-ion batteries for electric-vehicle applications.

In assessing these variables, we drew on The Boston Consulting Group’s extensive work with automotive OEMs and suppliers around the world and on a detailed analysis of the relevant intellectual-property landscape. We also created a battery cost model that allows us to project future costs. In addition, we conducted more than 50 interviews with battery suppliers, automotive OEMs, university researches, start-up companies working on leading-edge battery technologies, and government agencies across Asia, the United States, and Western Europe.

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