The path to savings
- Manufacturing at scale. Scale effects and manufacturing productivity improvements, representing about one-third of the potential price reductions through 2025, could mostly be captured by 2015. Savings will come largely from improving manufacturing processes, standardizing equipment, and spreading fixed costs over higher unit volumes. New plants could therefore be significantly more productive than those in operation before 2010–11.
- Lower components prices. Reductions in materials and components prices, representing about 25 percent of the overall savings opportunity, could mostly be captured by 2020. Under competitive pressure, EBIT4 margins could fall to half of today’s 20 to 40 percent. Component suppliers could reduce their costs dramatically by increasing manufacturing productivity and moving operations to locations where costs are optimal.
- Battery capacity-boosting technologies. Technical advances in cathodes, anodes, and electrolytes could increase the capacity of batteries by 80 to 110 percent by 2020–25. These efforts represent 40 to 45 percent of the identified price reductions. New battery cathodes that incorporate layered–layered structures5 eliminate dead zones and could improve cell capacity by 40 percent. Manufacturers are developing high-capacity silicon anodes that could increase cell capacity by 30 percent over today’s graphite anodes. And researchers are developing cathode–electrolyte pairs that could increase cell voltage to 4.2 volts, from 3.6 volts, by 2025, thus increasing cell capacities by 17 percent over present-day standards—and potentially by much more.