In recent developments, BYD, a leading Chinese electric vehicle (EV) manufacturer, recently unveiled a new charging system capable of delivering approximately 470 kilometres (about 292 miles) of range in just five minutes. This significant advancement has not only propelled BYD's stock to a record high but also holds potential implications for the broader EV market, particularly in the United Kingdom.
BYD introduced its cutting-edge charging system, claiming it can add around 292 miles of range in five minutes. This development positions BYD ahead of competitors like Tesla and Mercedes-Benz in fast-charging technology. This is especially true when it comes to the large German EV makers – where the solution to range anxiety has been to massively increase battery sizes – and therefore weight.
Better battery tech is certainly a smarter answer – and the stock market seems to agree. Since making the announcement, BYD's shares have surged by another 4% in Hong Kong, marking an 85% increase over the past year.
Declining Battery Costs Over the Years
The cost of lithium-ion battery packs has seen a substantial decrease over the past decade. In 2008, the average price was approximately $1,415 per kilowatt-hour (kWh). By 2023, this cost had dropped to about $139 per kWh, representing a 90% reduction. This decline is attributed to technological advancements, economies of scale and increased competition among manufacturers.
Implications of Rapid Charging on Battery Size and Vehicle Cost
Currently, many EVs are equipped with battery capacities ranging from 50 to 70 kWh, offering varying driving ranges. With the advent of practical ultra-fast charging technology, it's plausible that smaller batteries, perhaps between 25 to 40 kWh, could become standard. Such a shift could lead to several benefits:-
- Reduced Vehicle Costs: Smaller batteries require fewer materials and are less expensive to produce. Given the current average battery cost of $139 per kWh, reducing battery size by 25 kWh could lower production costs significantly
- Decreased Vehicle Weight: Smaller batteries weigh less, potentially enhancing vehicle efficiency and performance
- Faster Charging Times: Smaller batteries would reach full charge more quickly, even with existing charging infrastructure
Potential Impact on the UK EV Market
The United Kingdom has been actively promoting EV adoption to meet environmental goals. However, challenges such as charging infrastructure and vehicle costs persist. The integration of rapid charging technology could address these issues:-
- Enhanced Charging Infrastructure: Ultra-fast charging stations could alleviate range anxiety, making EVs more appealing to a broader audience
- Increased Adoption Rates: Lower vehicle costs resulting from smaller batteries could make EVs accessible to a wider demographic
- Grid Considerations: The deployment of ultra-fast chargers necessitates evaluating the national grid's capacity to handle increased demand. Strategic planning and investment would be essential to ensure stability
Increase EV Sales – The Potential Numbers
Reducing the average EV battery size by 25kWh could lead to a price reduction of approximately £3,500 to £4,000 per vehicle, considering current battery costs and manufacturer mark-ups. This adjustment would decrease the average EV price from £48,000 to around £44,000, narrowing the gap between EVs and traditional top-selling petrol/diesel cars (which averaged £22,000 pre-lockdown).
Historically, a £1,000 reduction in EV prices has led to a 2-5% increase in adoption rates. Applying this trend, a £4,000 price drop could boost EV sales by 8-20%. In 2024, the UK recorded 381,970 new EV registrations, representing 19.6% of total car sales. With the projected price reduction, 2025 could see EV sales rising to between 412,500 and 458,400 units, accounting for 21-23.5% of the market.
By 2026, assuming continued growth and further price reductions, EV sales could reach approximately 500,000 units, potentially surpassing 25% market share. These projections align with industry forecasts anticipating increased EV adoption in the coming years.
China's Transportation Vision Being realised
Five years ago, WhichEV interviewed Rupert Mitchell, Chief Strategy Officer for a major Chinese auto maker. He told us that China has been following a plan for transport that was developed back in 2000. It centres on connecting major cities with high-speed rail connections – which in turn move freight and passenger off the motorways. While the UK has been struggling with the idea of a 400km high-speed track from London to Manchester, China has successfully implemented 40,000km of track.
Removing longer car journeys from the transport mix, means that an electric car in China can be sold with low specifications and a small battery – putting more and more of the population into the ‘zero carbon emissions' bracket.
The Wuling Hongguang Mini EV is the product of an SAIC-GM-Wuling joint venture that started selling cars in 2020, allowing for an EV that costs £4,500 new, with 4 seats and a range of 62 miles. Over 1 million have been sold – including the Cabrio and GameBoy editions.
Conclusion
BYD's recent advancement in rapid charging technology signifies a pivotal moment in the EV industry. For the UK, embracing such innovations could accelerate EV adoption, reduce transportation emissions, and contribute to environmental objectives. However, realising these benefits requires coordinated efforts among manufacturers, policymakers, and infrastructure providers to address challenges and capitalise on emerging opportunities.
This will not work if the UK blindly follows Europe and the US in applying tariffs to Chinese cars. It's hard to calculate any benefits from Brexit – but significantly lower pricing on new EVs would be a nice bonus.
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