Due to rising competition from inexpensive Chinese electric vehicles, top automakers are urgently working to cut costs and accelerate the development of more affordable EVs.
Suppliers Help Slash EV Battery and Powertrain Costs
Andy Palmer, chairman of UK startup Brill Power, revealed that automakers are now looking to make affordable vehicles to avoid losing out to Chinese manufacturers.
Bill Power has developed software and hardware to boost battery management system performance in electric vehicles. The firm’s products could boost EV range by 60%, using smaller, cheaper batteries.
But Bill Power isn’t in this race alone. Renault recently announced plans to reduce EV costs by 40% to match gas-powered cars.
Also, Stellantis, in partnership with CATL, has begun building a plant in Europe to produce cheaper batteries and launched the affordable Citroen e-C3 SUV. Volkswagen and Tesla are both working on EVs costing just around 25,000 euros.
Startups and major suppliers support automakers’ cost-cutting efforts by targeting expensive EV components like batteries and motors. OneD Battery Sciences, a California-based startup, developed methods to boost energy density to cut battery size and cost by over $280 per 100 kWh pack.
OneD integrates silicon nanowires into an EV battery anode made of graphite, which helps reduce weight and charging time and boost range. By doing so, the firm saves 50% of the cost compared to using graphite alone for battery manufacturing.
On the other hand, Veekim has developed a ferrite magnet motor to avoid pricey rare earths, dropping motor costs by 20%.
“Reducing costs is now more important than anything else,” said OneD’s Vincent Pluvinage after recent meetings with automakers. Facing fewer Chinese import threats due to US subsidies, American automakers also want cheaper homegrown EVs.
Fears of slowing demand due to the high cost of EVs have created a sense of urgency across the industry. GM saved billions of dollars by developing a low-cost battery for its remodeled Bolt, which will launch in 2025. Ford plans 50% more in-house production to cut costs.
Our Next Energy is creating a half-price battery pack for BMW and others, using affordable lithium iron phosphate (LFP) cells. “We don’t need longer range, we want lower costs,” CEO of ONE Next Energy Mujeeb Ijaz said he heard from automakers.
Suppliers like CelLink and Addionics offer parts that slash production and materials costs with their simpler or patented designs. Addionics’ CEO says carmakers are demanding low-cost, lower range battery designs.
Global Shift Towards Cost-Efficiency
The cost-cutting trend extends beyond startups, with established companies like NXP and Siemens actively involved. NXP aims to reduce the number of electronic control units in EVs, while Siemens employs digital twin software simulation to halve the development time for expensive EV projects.
European automakers are adjusting their strategies to stay competitive with the arrival of lower-cost EVs from China, prompting a collective industry-wide shift. The fear of losing ground to Chinese manufacturers has prompted a widespread industry shift towards prioritizing affordable electric vehicles.
As automakers and suppliers collaborate on innovative cost-cutting measures, the race for economical EVs is reshaping the landscape of the automotive industry.