Just the other day we were asking ourselves if the price of the most expensive component of electric cars, the lithium ion batteries, will ever come down. As if to answer our query Charles Gassenheimer, Chief Executive over at battery maker Ener1, has come back with the answer we hoped to hear. Yes! And we're not talking about a small fraction of a reduction but rather a full 50 percent. Of course this kind of sea change in price will require a huge increase in volume. Gassenheimer says they will need to have volumes in the hundreds of thousands to achieve this price drop but silver-lines that cloud by saying, "But the important point of this here is the demand side of this equation doesn't seem to be the problem." He says demand is "off the charts in Europe and Asia" and expects American demand to keep increasing as well.

Ener1, who already make batteries for plug-in Priuses and have a $70 million supply deal with Th!nk, are pressing to reach this kind of output and are chatting up 24 (!) different auto makers. Of these, two may soon ink development contracts which could, because of the size of these companies, lead to Ener1 actually becoming cash flow positive in 2010. If they can achieve their cost-reduction goals, the pay-back period for all-electric cars may be reached in as little as two years instead of the current 7 or 8 if the price of oil stays around $100 a barrel.

[Source: Reuters]