Without a major breakthrough in battery technology, electric vehicles will remain an expensive proposition and a tiny fraction of the vehicle market for the foreseeable future, according to a study that questions how fast cars with cords will catch on.

The report by Boston Consulting Group underscores a point even some EV advocates have made: The cost of the batteries that power these cars is the technology's Achilles' heel, and automakers are being optimistic in predicting how quickly costs will come down. It finds that the long-term cost many automakers cite – $250 per kilowatt-hour – in their long-term electric plans is unrealistic without a "major breakthrough" that brings cheaper, more powerful batteries.

“Given current technology options, we see substantial challenges to achieving this goal by 2020,” says Xavier Mosquet, co-author of the study. “For years, people have been saying that one of the keys to reducing our dependency on fossil fuels is the electrification of the vehicle fleet. The reality is, electric-car batteries are both too expensive and too technologically limited for this to happen in the foreseeable future.”

Several major automakers are developing electric vehicles, and the Chevrolet Volt and Nissan Leaf are expected by the end of the year. Cars with cords will be front and center next week at the Detroit auto show in a section called "Electric Avenue," with Audi, BMW and Volvo among the companies bringing concept cars.

Car companies aren't alone in betting on the technology.

The Obama Administration has set aside $2.4 billion to spur development of next-generation batteries and electric vehicles, and it is loaning money to companies like Tesla Motors, Fisker Automotive and Nissan to develop EVs. The Department of Energy gave General Motors $106 million in grants to refurbish an old factory to produce batteries for the Volt.

“We urgently need to change how we power cars and trucks,” Energy Secretary Steven Chu said Thursday at the opening of the GM battery factory. "America has fallen behind in the race to build the cars of the future."

Most of the EVs on the horizon will use lithium-ion batteries, which the report says currently run as much as $1,200 per kilowatt-hour (.pdf). Many automakers, citing the typical cost of $250 to $400 per kilowatt-hour for such batteries in consumer electronics, expect automotive batteries to cost about that much at large-scale production.

The flaw in that thinking, according to the report, is the battery packs in consumer electronics are smaller and simpler than those in automobiles, and they don't have the same safety and longevity requirements. For that reason, the report finds, battery costs most likely will be higher than automakers predict.

Both the Volt and the Leaf will roll out of factories by the end of the year. The Volt has a 16 kWh battery; General Motors hasn't said what the car will cost but on Thursday said it could be less than the $40,000 that has been widely cited. Nissan says the Leaf, which has a 24-kWh pack, will cost between $26,000 and $34,000 before the $7,500 federal EV tax credit.

One thing Nissan is considering to keep costs down is selling the car but leasing the battery. Company CEO Carlos Ghosn said such an approach will hasten the adoption of EVs by making them more competitive with gas-burning vehicles.

“For an electric car to make inroads, we have to make sure it starts at the same cost as a conventional car,” he said before unveiling the Leaf in Los Angeles in November.

Despite the dour prediction, the report predicts steady growth for hybrids, plug-in hybrids and EVs during the next decade. It predicts 26 percent of the 54.5 million cars sold in China, Japan, the United States and Western Europe in 2020 will have an electric drivetrain of some kind. That works out to 14 million cars. By that time, the report predicts, lithium-ion batteries will run about $570 to $700 per kilowatt-hour, with a 15 kilowatt-hour pack running about $8,000 to $10,000. At that price, Mosquet says, it will take 15 years for the cost of owning an electric car to match that of a gasoline car.

Of those 14 million electric cars the report sees on the road in 2020, 1.5 million will be battery electric vehicles like the Leaf. Another 1.5 million will be range-extended electric vehicles like the Volt, which uses a small gasoline engine to drive a generator when the battery winds down. The remaining 11 million will be plug-in hybrids or hybrids like the Toyota Prius.

The number of electric vehicles the Boston Consulting Group sees being sold in 2020 comes to 6 percent. That's within the ballpark of Nissan's findings that 8 percent of Americans and 9 percent of Europeans are "hand-raisers" who say their next car will be electric.

“I think I’m being conservative saying 10 percent” of the market will be EVs by 2020, Ghosn said in November. “People will say ‘You’re being too bullish.’ But I think that underestimates people’s concern for the environment.”

Paul Scott, a co-founder of the advocacy group Plug In America, agrees. He says reports like those prepared by Boston Consulting Group often overlook the fact oil isn't getting any cheaper, people are increasingly concerned about the environment and they're tired of buying oil from countries hostile to the United States.

“These are issues that the bottom-line argument doesn’t take into account," Scott said. "There are millions of people for whom those issues are important, and they will pay more for an electric car.”

Even at, say, $750 per kilowatt-hour for a battery, Scott believes buyers will line up for electric cars.

Photos of the Audi e-tron concept at the Los Angeles Auto Show: Jim Merithew/Wired.com

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