Electric Car Batteries Might Not Get Cheaper

St. Paul economist and writer Edward Lotterman argues that diseconomies of scale could result in 'an increasing cost industry.'

Published: 30-Dec-2010

Sales of hybrid cars continue to grow -- even our neighbors bought one. But the increasing popularity of hybrids doesn't necessarily mean that the costs of making batteries for them will get cheaper. In fact, it could result in what economists call 'an increasing cost industry.' This is an uncommon situation.

More often, changes in per-unit average cost come as a result of a larger or smaller production plant. If average costs fall as a factory gets bigger, economists say there are "economies of scale."

The opposite situation where unit costs rise as a factory or company get bigger is "diseconomies of scale." These were common in Soviet industry when the Kremlin made a fetish of having the world's largest steel mill, truck factory or whatever. And, considering the companies as a whole, GM and IBM in the 1970s both probably were examples of diseconomies of scale.


First battery pack produced in GM's new Brownstown battery plant.

Official General Motors press release on production of first Volt electric vehicle battery pack.

Batteries produced at Sunderland plant will be used in both Nissan and Renault electric vehicles. Pictures in Nissan Leaf EV.

The company has applied to Sunderland City council for planning permission for a new battery plant which will create up to 350 new jobs.

Th!nk City electric cars roll off Valmet assembly line in Finland.

Eltek Valere starts delivering the first chargers in February.


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