Analysis: Lithium-ion battery improvements will eventually make Chevy Volt affordable

"The early buyers are going to be willing to pay that kind of money for that size of vehicle and that kind of vehicle," said Bruce Belzowski, assistant research scientist for the University of Michigan's Transportation Research Institute. "But in the bigger picture, if you want more people to buy, you’re going to have to keep the price within range for that type of vehicle.

Just like other technologies, though, the price of electric vehicles will plummet over time. That’s because the lithium-ion battery technology that allows the Volt to travel 40 miles on a single electrical charge before using gasoline is improving day by day.

General Motors plans to start selling the Chevrolet Volt, an extended-range electric vehicle, later this year.

Companies like Ann Arbor-based Sakti3 - a University of Michigan spinoff - and the Ann Arbor engineering office of AVL Powertrain are feverishly developing alternative propulsion technology for the major automakers.

The high cost of the Volt will be offset by a $7,500 federal tax credit for early buyers, which is built into the lease pricing. That government incentive makes electric vehicles artificially cheaper for a little while, giving engineers and scientists time to make the batteries lighter and more reliable.

"I think it becomes a volume issue," Belzowski said. "As the economies of scale kick in, the price of the components will go down, but there is a certain amount of engineering, continuous improvement that will be a part of that as well."

GM is confident the Volt, which will first hit showrooms in November, will be just as reliable as a traditional internal combustion engine vehicle. In fact, GM recently announced it would provide an eight-year, 100,000-mile warranty on the car’s 400-pound battery pack.

Nonetheless, the battery’s electrochemical makeup needs to improve before vehicles like the Volt and Nissan’s forthcoming battery electric Leaf are affordable to the typical consumer.

The U.S. Department of Energy earlier this month projected the price of electric vehicle batteries would drop 70 percent by 2015.

It should be said that some experts are skeptical the price of the lithium-ion batteries will plummet, despite significant investments in research and production at future Michigan plants such as LG Chem's operation in Holland and Dow Chemical's plant in Midland.

The research firm Boston Consulting Group, for example, said in a report earlier this year that it foresees "substantial challenges" in driving the cost of electric vehicle batteries down to the industry's goal of $250 per kilowatt hour. Costs are currently estimated at between $1,000 and $1,250.

Belzowski said the Energy Department's projection "might be a bit of a stretch," but he was also dubious about the Boston Consulting Group's prediction.

"Ten years is a long time and you don’t know what’s going to happen during that time," he said. "Some kind of oil shock or a big push, something that creates a lot of enthusiasm or a need to make those kinds of transitions -- they can push the curve in terms of speeding up the process. The government’s obviously going to have to play a role here and if they don’t push it, it’s probably not going to happen."

GM knows early adopters will pay a premium for the Volt, which will be a status car for alternative energy enthusiasts.

For now, don’t expect Ann Arbor area dealers to have a hard time selling the Volt, despite the pricepoint. GM plans to make just 10,000 Volts for the first year, meaning dealers that agree to carry the car will only have a few.

Dexter’s LaFontaine Chevrolet, for example, plans to have two Volts for sale starting in March, sales manager Shadrick Bennett said. Interest in the Volt has been high, he said.

“We’ll order as many as they allow us,” he said. “That’s our first allotment.”

Bennett said the dealership’s owners will decide whether to accept pre-orders for the Volt and how to price it.

“I’m sure there will be a premium on it if we’re going only getting two of them,” he said.

Of course, customers will eventually be able to order custom versions of the Volt. Chevy said Monday, for example, that it would offer the Volt in six colors: black, silver ice metallic, crystal red metallic tintcoat, white diamond tricoat, cyber gray metallic and viridian joule tricoat.

Rest assured the price of paint, however, is staying steady.

Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.