Study: Switchable, Leased Batteries Could Speed Up Adoption of Electric Cars

More consumers would buy electric vehicles if the battery could be leased on a pay-per-mile service contract, argues a new study from the University of California at Berkeley.

Titled “Electric Cars in the United States: A New Model with Forecasts to 2030” (PDF), the study from the UC Berkley’s Center for Entrepreneurship and Technology forecasts that electric vehicles could account for 64% of light vehicle sales and comprise 24% of the U.S. light vehicle fleet by 2030. However, this level of mass adoption would only be possible if purchase prices were lowered and the vehicles could compete with existing gasoline fueling infrastructure in terms of price, range, and reliability, it said.

The study’s author, Thomas Becker, a Berkeley economist who specializes in international and environmental economics, finds that separating the purchase of the battery from the car is the most practical and cost-effective means of addressing these concerns.

In previous studies, projected adoption rates have generally been based on electric vehicle sales as standalone products,” the center said in a press release. “Pay-per-mile service contracts eliminate the additional upfront costs traditionally associated with electric cars.”

First, it says, not having to pay for the battery upfront makes the purchase price of an electric car competitive with that of an internal combustion vehicle. “Given current battery prices and the federal tax incentives for the purchase of electric cars, switchable battery vehicles are expected to be $7,500 less expensive than a similar gasoline-powered car when introduced to the market in 2012,” the study said. “The total cost of ownership of these vehicles is expected to be between $0.10 and $0.13 lower on a per-mile basis than gasoline-powered cars, depending on the future price of oil.”

Second, it assumes that electric vehicles with switchable batteries will have a driving range comparable to gasoline-powered vehicles. Just as there is a network of gas stations, the study incorporates the cost of a network of public battery charging spots augmented by battery switching stations into the per-mile service contract price offered by electric car network operators. This business model innovation will ensure that a sufficient density of electric car infrastructure is deployed to extend the range of these vehicles, the study suggests. Through this system, Becker argues that “the overall range of electric cars will eventually rival that of gasoline-powered vehicles.”

Lastly, consumers must perceive electric cars to be as reliable as gasoline-powered vehicles. To achieve this, Becker again finds that the best solution lies in separating the ownership of the vehicle from the battery. By placing ownership of the battery in the hands of an electric car network operator, consumer concerns over the lifetime or durability of the battery are eliminated. Switchable batteries also allow the newest innovations in battery technology to reach drivers more quickly.

The study also quantifies how the electrification of the U.S. transportation system will decrease America’s dependence on foreign oil, increase employment, and reduce the environmental impact of transportation emissions.

"A wide range of economic benefits come with price-competitive electric cars," said Becker. "These vehicles make eliminating the U.S. dependence on foreign oil an achievable goal. Transitioning to electric cars will also create jobs, lower health care costs, and significantly lower greenhouse gas emissions."

Source: UC Berkley’s Center for Entrepreneurship and Technology