Plunging battery costs will bring the greatest change in automotive history

❝ Plunging battery costs will drive the auto industry’s biggest change in more than a century, enabling a boom by 2030 in technologies from self-driving electric cars to ride-sharing applications.

The price of lithium-ion battery packs for electric cars has fallen 65 percent since 2010 and is likely to keep declining, according to a report by Bloomberg New Energy Finance and McKinsey & Co. Consumers may appreciate the biggest impact in the form of cheaper costs for taxis, including substantial reductions for ones run by machines.

Driving the trend are cheaper batteries, which are the biggest cost in electric cars, along with rapidly improving computer technology that will make self-driving cars a reality on roads within the next decade. Changes already are starting to feed through in the form of an investment boom in ride-hailing applications such as Uber Technologies…and the mushrooming of software developers that will link electric cars to utilities and payment systems.

Those trends will reduce the cost of running a taxi driven by a human by 3.1 percent to $2.76 a mile driven by 2025, according to the report. Self-driving taxis may be as cheap as 67 cents a mile to operate. The study counted in the total cost of owning the vehicle, driver’s pay and allowances for overhead and returns for investors…

❝ The changes will reshape the auto industry, tilting the need for investment away from developing engines and toward perfecting software that drives cars and links them to the web for managing payment and navigation, McKinsey said. Power companies could benefit from a 3 percent increase in electricity demand in the next 15 years…

❝ Battery and hybrid vehicles on the world’s roads may displace as many as 13 million barrels of oil a day by 2040, BNEF forecast this year in a separate report. The costs of lithium-ion batteries, which typically make up about 40 percent of an electric car’s value, may fall by 16 percent to 20 percent with each cumulative doubling of the vehicles’ manufacture…

The only cornball advice I have to offer is – it’s better to invest in rapidly growing tech too soon rather than too late. But, I welcome the changes coming in safety and environment with open arms.

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