How batteries got dirt cheap
Hi friends,
Before we learn some #FunFacts about batteries, I want to address the atomic bomb of a bill set to detonate in the U.S. congress.
Among its many heartrending provisions, Trump's bill earmarks $170 billion for ICE agents to terrorize even more immigrants in our communities and build even more concentration camps, just like the 3,000-bed "Alligator Alcatraz" newly erected in the Florida wetlands.
$170 billion represents a 62% larger budget than the entire federal prison system. It could result in the daily detention of at least 116,000 non-citizens, per the American Immigration Council.
And that's just part of it. The bill would also kick 16 million people off Medicaid, close 1 in 4 nursing homes, raise electricity bills by an average of 30%, transfer $5 TRILLION from the poorest among us to the wealthiest 1%, and, last but not least, eviscerate the nascent clean energy movement in our country (despite a few of the provisions being walked back in the Senate).
Trump's bill would plunge America into recession. It would see masked, unidentifiable gestapo agents pointing machine guns on our street corners. It would be the beginning of the end.
So we need everyone ringing the alarm bells. Tell everyone you know. Call your representatives right now. The public does not wants this. And it's not too late to stop it.
Okay, I'm taking a breath. It feels pretty silly transitioning from all that to part 2 of our series on batteries. But transition we must. So here goes.
Batteries today are the cheapest they've ever been by a country mile.
Which country, you may ask? That would be China.
Batteries: an American tragedy
The history of Lithium Ion (LI) batteries is an American tragedy. A Yank by the humble name of John B. Goodenough invented the damn things back in 1980, but the U.S. government was totally uninterested in funding their commercial development. (Sound familiar?) Instead, we passed off Goodenough's exceptional work to Japan, where the first commercial, rechargeable LI battery was produced by Sony in 1991.
The U.S. promptly marveled at Sony's creation, reflected on our miscues, and changed our ways. Right?
Hell, no! In 2017, we quite literally gave away our battery patents to China, whose engineers and scientists have been hard at work on their development ever since.
The thing is, batteries make clean energy tech like solar panels and wind turbines viable as a source of firm, 24/7 energy. And that means they pose a direct threat to the future of Big Oil. It's pretty much that simple. Oil major Chevron went to so far as to (allegedly) acquire battery patents for the sole purpose of shutting down promising research.
So, despite registering 1,100 American battery tech patents between 1976–2018, we never pursued mass production. Consequently, China now dominates every link of the global battery supply chain, from chemical and mineral refinement to anode and cathode production to cell manufacturing.
Here's just how dominant they've become:
- China produces 80% of the world's Lithium Ion battery cells
- A single Chinese company, battery giant CATL, holds 37% of global market share, while another, electric vehicle manufacturer BYD, holds 16%
- China produces 85% of the most commonly used battery chemicals (Nickel Manganese and Copper (NMC) / Lithium Iron Phosphate (LFP)), and accounts for over 90% of the world's refined graphite, which is another important battery component
I could go on, but you get the idea.
One outcome of China's dominance is that America does not have access to cheap LI batteries. Not because China won't sell them to us—but because we tariff the shit out of them in order to, uh, encourage domestic manufacturing, which Trump's bill seeks to destroy. Take that, China!
The Handycam can
But let's return to 1991. I was a chubby child of five when Japanese electronics manufacturer Sony debuted the first commercially viable Lithium Ion battery for their new handheld camcorder, the Handycam. Remember those? They introduced the world to adorable home movies and, critically, paved the way for America's Funniest Home Videos.
Those first-generation Handycams didn't come cheap. The initial retail price ranged from $900–$1,500, the equivalent of $1,500–$3,000 in today's dollars. Much of that cost was on account of manufacturing the novel LI battery cells.
How battery prices are measured
Batteries come in all different sizes and are made up of many different chemical compositions, but at the end of the day they all do the same thing: store energy. This means that we can measure any old battery's price by what it costs to manufacture one kilowatt-hour (kWh) of storage.
Let's unpack what that means.
A kilowatt-hour is a measurement of energy. A battery that holds one kilowatt-hour could power a 10 watt light bulb for 100 hours.
Here are some examples of how much energy a battery can store:
- Sony's 1991 Handycam battery had a storage capacity of about 7 watt-hours
- A brand new iPhone's battery can store about 13 watt-hours
- A Tesla Powerwall home battery can store 13.5 kilowatt-hours—over a thousand times more than a new iPhone
- Tesla's hilariously unpopular Cybertruck's battery has a usable capacity of 123 kilowatt-hours, the equivalent of nearly 10 Powerwalls. That's a lot of juice!
In theory, all of those differently sized batteries could cost the same amount to produce if you measured them on a per kilowatt-hour basis.
But they don't, because one of them was made in 1991 and battery costs have plummeted in the intervening 34 years.
The price of batteries today (and tomorrow?)
When it debuted, Sony's Handycam battery cost a whopping $3,000 per kilowatt-hour. That's the equivalent of over $7,000 today.
By the year 2,000—just nine years later—cell-level costs had already dropped to ~$1,000 per kWh.
By 2024, the average price of an LI battery cell manufactured in China was less than $60 per kilowatt-hour.
And here's the kicker: they're not done yet. The general consensus is that battery prices are still in free-fall. Experts expect the per kilowatt-hour cost to hit $30 by 2030.
Think about that. $30/kWh in 2030, down from the equivalent of $7,000/kWh in 1991, would represent a 99.6% reduction in cost.
That's nucking futs.
How the hell did it happen?
The power of the learning curve
Batteries, like their clean energy forebears (solar panels and wind turbines), have massively benefitted from a concept called learning curves.
Learning curves are pretty self-explanatory: the more we do something, the better we get at doing it. But there are certain conditions under which a learning curve becomes particularly effective. One such set of conditions is when we produce a piece of hardware at large scale in a factory environment. I'll tell you why.
A million paper airplanes
A little thought experiment. Imagine you have to construct one million paper airplanes. It's just you in a room with a writing desk, a wastebasket, and stack upon stack of printer paper.
You haven't made a paper airplane since childhood. You do not remember how to do it. But you've gotta start somewhere, right? So you make some random folds and give it a toss. Your ugly, crappy plane nosedives into the ground straightaway.
You try a different design and get more or less the same result. You try a third time and it's even worse than before.
Sorry to say, your first 100 attempts are mostly crap. But slowly, steadily, you begin to discover winning strategies. After you've produced 500 paper airplanes, you really get the hang of it. You figure out how to quickly construct airplanes that fly quite far. The many design improvements you've made didn't occur to you all at once—they came in fits and starts. One day in the shower you came up with an idea for how you might shape the wings differently. A week later, stoned off your ass, you experimented with attaching a paper clip to the hull. You're going insane making one million paper airplanes, but lo and behold, your latest designs are lightyears ahead of where you started.
Thus, via a sort of Darwinian selection process, you continually refine your airplane until at long last you approach the theoretical limit of how far a piece of paper can be made to fly by human hands.
Now here's the question: was your progress from crap plane to super soarer linear? It doesn't seem like it. It's not like every iteration was a slight improvement upon the last. Some didn't work at all. Then you came up with that idea for the wings in the shower that one time (how many weeks ago was that? How many months??), and the paper clip thing was pure stoned intuition. Some ideas arrived in dreams. Others were little tweaks in the process. But each was a random event, right?
Not really! The cool thing about learning curves is that, with the benefit of hindsight and hard data, we know that they're actually remarkably consistent over time. So much so that you can extrapolate a formula for how frequently you'll continue to see improvements.
Example: the cost of building an onshore wind farm has decreased about 10% every time the total number of wind farms in operation has doubled.
The same formula holds true for solar panels... except their price consistently drops ~20% every time the total number of installed megawatts of solar doubles.
Solar panels and wind turbines have both benefitted (and continue to benefit) from learning curves. So why do solar panels get cheaper faster than wind turbines?
It's because solar panels are more modular than wind turbines—they're made up of more small, standardized parts that fit together to make the whole. Each of those individual parts can be independently improved, which means that each module of a solar panel is effectively on its own learning curve. The more modules involved, the more opportunities there are for efficiency gains.
Guess what's even more modular than solar panels? That's right: freaking batteries. Batteries get an astonishing 30% cheaper every time their cumulative production doubles. 30%!
Nobody really knows how cheap LI batteries will get. All learning curves ultimately plateau. But we should all be excited to find out.
Production cost, however, is just one modular component of the battery success story.
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