CMU/MIT study finds large-scale battery manufacturing will do little to reduce unit costs past a 200-300 MWh annual production level

22 October 2014

A new techno-economic analysis by researchers at Carnegie Mellon University (CMU) and MIT has found that economies of scale for manufacturing current Li-ion batteries for light-duty EV applications (in this case, prismatic pouch NMC333-G batteries and packs) are reached quickly at around 200-300 MWh annual production. Increased volume beyond that does little to reduce unit costs, except potentially indirectly through factors such as experience, learning, and innovation, they determined.

“That’s comparable to the amount of batteries produced for the Nissan Leaf or the Chevy Volt last year,” said CMU’s Dr. Jeremy Michalek, the corresponding author of a paper on the research published in the Journal of Power Sources. “Past this point, higher volume alone won’t do much to cut cost. Battery cost is the single largest economic barrier for mainstream adoption of electric vehicles, and large factories alone aren’t likely to solve the battery cost problem.”

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The cost of Li-ion batteries is arguably the single largest barrier to mainstream adoption of EVs. Thus, battery cost is a key factor in addressing oil dependency, global warming, and air pollution in the United States. We investigate the role of battery design variables on the cost and performance of Li-ion batteries by first characterizing the tradeoffs in battery design and subsequently using this knowledge to optimize and assess technical and economic implications.

Existing studies on the economics, adoption potential, and emissions reduction potential of EVs typically treat Li-ion batteries as though they are all the same, with a single estimate of cost per kWh of storage. In practice, Li-ion technology encompasses a wide range of alternative chemistries (e.g.: LiMn₂O₄, LiFePO₄, LiNi_0.33Mn_0.33Co_0.33, etc.), electrode designs (e.g.: thin/thick), packaging alternatives (prismatic, pouch, cylindrical), and capacities (size, number of electrode layers, etc.) of the individual cells that make up the pack as well as differences in pack configuration, thermal management, and control electronics. Each of the potential combinations of these alternatives has different performance, cost, weight, volumetric, thermal, and degradation characteristics that interact with the constraints and needs in the design of a vehicle powertrain system. For example, short-range PHEVs require cells with higher power-to-energy ratios because they have less battery capacity over which to distribute peak power demands. Thinner electrodes deliver higher power per unit capacity, but they also require more of the inactive materials, and this has implications for cost, volume, weight, and life.

… We aim to produce a transparent, bottom-up assessment that explicitly accounts for the battery design changes needed to meet requirements for various EV applications at minimum cost while identifying key factors and characterizing uncertainty.

The team built an optimization model to identify the least-cost battery and pack design that satisfies energy and power requirements representative of PHEV₁₀ (16 km AER), PHEV₃₀ (48 km AER), PHEV₆₀ (96 km AER), and BEV₂₀₀ (320 km AER) vehicles, where the subscript indicates the vehicle’s all-electric range (AER) in miles.

They calculated cell capacities for different designs, then pack energy using capacity times average cell voltage as estimated by using Battery Design Studio (BDS) simulation software. BDS was also used to simulate the hybrid pulse power characterization (HPPC) test—defined by the United States Advanced Battery Consortium (USABC)—on a set of 48 virtual LiNi_0.33Mn_0.33Co_0.33/Graphite (NMC333-G) cells varied over a full factorial of selected electrode thickness and cell capacity levels. The single side electrode coating thickness was varied from 25 mm to 200 mm in intervals of 25 mm and the cell capacity was varied from 10 Ah up to 60 Ah in 10 Ah intervals.

To compute cost, they modeled the process of manufacturing the Li-ion battery pack using a process-based cost model (PBCM) to simulate production operations in a manufacturing plant, using data at the individual machine level for each of the process steps. They adopted information on equipment cost and processing rates for most of the many process steps from Argonne National Laboratory’s Li-ion battery cost and performance model, BatPaC.

Process steps involved in Li-ion battery manufacturing (adopted from ANL’s BatPaC). Process steps with sufficient data on machine processing rates are assumed to be dedicated, and have been shown in green boxes with italicized fonts. Blue boxes show the process steps for which sufficient information was not available, and they were therefore considered undedicated. Credit: Sakti et al. Click to enlarge.

They assumed a yield of 100% for all process steps except Cell Stacking (#7 in the diagram above), in which defects may be incorporated as the bi-cell layers are stacked on top of one another. Their base assumption for cell stacking yield was 95%.

Comparing the cost of a battery and pack design sized for a PHEV₂₀, for example, using BatPaC vs. the PBCM with base case, optimistic, and pessimistic assumptions found results from the base case PBCM comparable to BatPaC at a volume of 100,000 packs, the level at which BatPaC is calibrated.

Total breakdown of the sample PHEV₂₀ (36 km AER) battery pack at 20,000 packs per year, with a further breakdown of the material cost. Sakti et al. Click to enlarge.

The PBCM results are lower cost than BatPaC estimates at low production volume and comparable cost at higher volume.

Results from the PBCM suggest that economies of scale are reached at about 200-300 MWh of battery capacity production—much sooner than suggested by the BatPaC model. This early attainment of economies of scale is observed across a wide range of battery pack specifications.

They found that the specific cost of the optimal design decreases with the increasing electric range—from $545 kWh^-1 for the PHEV₁₀ (16 km AER) to $230 kWh^-1 for the BEV₂₀₀ (320 km AER). Part of this cost decrease is due to increased cathode thickness for larger AER applications that have lower power requirements per unit energy.

However, they noted, the PHEV₃₀ (48 km AER) design is constrained by the upper bound for cathode thickness, and larger packs cannot take advantage of thicker electrodes. Additional reductions in specific cost for the PHEV₆₀ (96 km AER) and BEV₂₀₀ (320 km AER) result primarily from spreading some of the packaging, battery management and thermal control costs over a larger pack energy.

In general, results suggest that the lowest cost designs use the thickest electrode coatings that satisfy the power requirements and large cell capacity and a preference for more cells per module instead of more modules per pack (because additional modules incur more module regulation costs, primarily from the module state-of-charge regulators). There is a marginal cost difference between achieving an active material target via increasing cathode thickness vs. increasing the number of bi-cell layers.

The results showed that pack-level specific cost ($ kWh^-1) for these designs varies almost linearly with power-to-energy ratio.

Specific costs are pessimistically as high as $680 kWh^-1 for the PHEV₁₀ reducing to $330 kWh^-1 for a BEV₂₀₀ (320 km AER) or optimistically as high as $480 kWh^-1 for the PHEV₁₀ (16 km AER) reducing to $190 kWh^-1 for the BEV200 (320 km AER). Overall, the effect of pack size on specific cost is larger than the uncertainty represented by our optimistic and pessimistic cases.

… The reduced specific cost for larger packs is due to the ability to use thicker electrodes for applications with larger energy requirements (larger AER), and new technology enabling cathode thickness values up to 200 mm could further decrease costs of larger packs by up to 8%.

The results of the study raise questions about whether increasing vehicle sales is the best way to continue to spend limited resources—as opposed to, for example, more research on battery technology,said co-author Dr. Jay Whitacre. Whitacre pointed to the study’s finding that a way to make batteries with thicker electrodes could lower the cost of long-range electric vehicle batteries by up to 8%, and noted that increasing production beyond current levels may only cut costs by less than 3%.

If economies of scale in battery production are achieved at relatively low volume, as our process-based cost model suggests, then policies attempting to achieve reduced EV costs via subsidies for EV sales may have limited effects on battery costs beyond levels of ~200-300 MWh per year. …
Additionally, our results emphasize that different cell and pack designs are appropriate for different applications. Customizing battery designs for each application may save costs (assuming adequate production volume), and policymakers should be careful not to assume that achievement of cost targets for one application necessarily enables cost targets to be achieved for other applications.

Further, any cost estimate for automotive Li-ion batteries should be viewed in the context of the application (AER), the scope (cell vs. pack level costs), and the unit (cost per nameplate capacity vs. cost per usable capacity). Comparing cost estimates may be misleading if differences in context are not accounted for.

NMC-G. The study only considered the popular NMC-G chemistry, which is used either solely or in combination with other active material chemistries in the Ford C-Max Energi, BMW ActiveE, BMW i3, BMW i8, Mitsubishi i-MiEV, Volvo C30 EV, Honda Fit EV and Honda Accord, according to the team.

Nor did the study explore the 18650 cell format that Tesla uses, opting instead for the prismatic format that everyone else is using, Michalek said. Although manufacturing cylindrical cells involves a few different steps, Michalek said he would expect economies of scale for these cells to be comparable. Indeed, with manufacturing for that format having already been cost-minimized for decades, there is likely less room for improvement in that format, he suggested.

Although high volume alone may not provide the cost savings Tesla is looking for from its Gigafactory, the company may get additional savings from other factors such as supply chain integration, he suggested.

Resources

• Apurba Sakti, Jeremy J. Michalek, Erica R.H. Fuchs, Jay F. Whitacre (2015) “A techno-economic analysis and optimization of Li-ion batteries for light-duty passenger vehicle electrification,” Journal of Power Sources, Volume 273, Pages 966-980 doi: 10.1016/j.jpowsour.2014.09.078