Forecasting the value of battery electric vehicles compared to internal combustion engine vehicles: The influence of driving range and battery technology

Abstract

Battery electric vehicles (BEVs) are now clearly a promising candidate to address the environmental problems that are associated with conventional internal combustion engine vehicles (ICEVs). Accordingly, governments in many countries have promoted consumer adoption of BEVs by providing financial incentives and automobile manufacturers are accelerating their efforts to develop BEVs. However, BEVs, unlike ICEVs, have not yet achieved mass market entry; continuing technological change is one way this barrier could be surmounted. The aim of this study is to assess and forecast whether and when design changes and technological improvements related to major challenges in driving range and battery cost will make the user value of BEVs greater than that of ICEVs. Specifically, we estimate the relative user value of BEVs and ICEVs resulting after design modifications are implemented to achieve different driving ranges by considering engineering trade-offs based on vehicle simulations. Then, we analyze when the BEV relative user value is expected to exceed that of ICEVs as energy density and cost of batteries improve due to ongoing technological changes. Our analysis demonstrates that the relative value of BEVs is lower than that of ICEVs because BEVs have high battery cost and high cost of time spent recharging them, despite featuring high torque, high fuel efficiency, and low fuel cost. Moreover, we found that the relative value differences between BEVs and ICEVs are found to be lower for high-performance large cars than low-performance compact cars because BEVs can achieve high acceleration performance more easily than can ICEVs. In addition, this study predicts that in approximately the year 2050, high-performance large BEVs could have a higher relative value than high-performance large ICEVs because of technological improvements in batteries; however, low-performance compact BEVs are still very likely to have significantly lower user values than will comparable ICEVs until well beyond the year 2050.