College of Business > Academics > Department of Economics > News & Events > Combustion Engine
By Professor Anthony Krautmann /
April 20, 2021 /
Posted in: Research and Centers /
Currently, power stations contribute about 25% of all U.S. emissions, while light-duty vehicles add another 17%. Shifting to the use of lithium batteries in storing electricity and powering electric vehicles would make a significant reduction in the overall level of U.S. emissions.
Global output of lithium has tripled in the past decade. Much of it is mined underground in brine deposits in Australia and Chile, although an increasing amount is being produced in Nevada and North Carolina. Nearly 65% of all the lithium batteries, however, are produced in China — a fact that many see as a national security risk. Two-thirds of all lithium batteries are used in electric vehicles, where the constant charging and discharging of the batteries cause an eventual degradation of the battery cells. Prices of lithium battery packs for electric vehicles are falling fast.
The electric vehicle's battery pack and motor currently cost about $4,000 more than an internal-combustion engine. By 2022, this difference will be only about $1,900; by 2025, it is forecast to cost the same. Not surprisingly, lower costs imply lower prices for electric vehicles, increasing consumption. Currently, electric vehicles make up about 4% of all new car sales; by 2025, this market share is forecast to rise to 22%. Car makers target a price of lithium batteries at $250 per kilowatt-hour (KWh) in order to make electric vehicles cost effective (without any tax credit). The current price has fallen to about $125/KWh, and is expected to bottom out at $80/KWh in a few years.
Recycled lithium batteries from electric vehicles are being used to store green electricity for times when wind or solar generation is down. Storing electricity using lithium batteries is going to both transform the power grid as well as make electricity generated from renewable sources (e.g., solar, wind) more cost effective. One estimate is that within a decade, 13% of the U.S. electricity currently produced using fossil fuels (primarily coal and natural gas) will be replaced with renewable sources.
California and New York recently mandated that utilities install more lithium batteries. The federal government has established a consortium of agencies to work and promote lithium battery production; it recently invoked the Defense Production Act to speed up development and reduce costs.
Finally, it must be recognized that there are some difficulties with the development and promotion of lithium batteries. For one, powering all those electric vehicles will increase demand for electricity, and hence its price. Second, lithium batteries have a history of heating up and catching on fire. The cause of the crash of the UPS Flight 6 in 2010 is attributed to a fire caused by lithium batteries improperly stored in the hull of the aircraft. Recent recalls by GM, Hyundai and BMW are all associated with problems of lithium batteries overheating. Additionally, with all those electric vehicles on the road, the U.S. is going to need a massive increase in charging stations.
In spite of these difficulties, the electric vehicle is here to stay. As Sandy Munro (an auto engineer) put it, the internal-combustion engine has been engineered to near perfection over the last century, while development of the battery-powered electric vehicle is in its infancy. “The internal-combustion engine age is coming to an end" according to Munro.