WASHINGTON, /PRNewswire/ -- As policy makers, automotive industry officials, and media converge on the 2010 Washington Auto Show this week, they will be presented with an array of sleek electric cars -- both concepts and production models.

But amid all the buzz about fuel efficiency and environmental friendliness, decision makers should bear in mind two issues that will curb demand for these innovative vehicles: the cost and technological limitations of their batteries.

Although electric vehicle (EV) battery costs are expected to fall sharply over the coming decade, they are unlikely to drop enough to spark widespread adoption of fully electric vehicles without a major breakthrough in battery technology, according to a study by The Boston Consulting Group (BCG).

The study, released earlier this month, concludes that the long-term cost target used by many carmakers in planning their future fleets of electric cars — $250 per kilowatt-hour (kWh) — is unlikely to be achieved unless there is a major breakthrough in battery chemistry that substantially increases the energy a battery can store without significantly increasing the cost of either battery materials or the manufacturing process.

"Given current technology options, we see substantial challenges to achieving this goal by 2020," said Xavier Mosquet, Detroit-based leader of BCG's global automotive practice and a coauthor 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 vehicles. The reality is electric-car batteries are both too expensive and too technologically limited for this to happen in the foreseeable future."

Most electric cars in the new decade will use lithium-ion batteries, which are lighter and more powerful than the nickel-metal hydride (NiMH) batteries used today in hybrids like the Toyota Prius.

Citing the current cost of similar lithium-ion batteries used in consumer electronics (about $250 to $400 per kWh), many car makers hope that the cost of an automotive lithium-ion battery pack will fall from its current price of between $1,000 and 1,200 per kWh to closer to $250-$300 per kWh at scaled production.

BCG, however, points out that consumer batteries are simpler than car batteries and must meet significantly less demanding requirements, especially regarding safety and life span. So actual battery costs will likely be higher than what carmakers predict.

Despite this cost challenge, BCG projects steady growth for EVs and their batteries thanks to governmental support and more demanding regulations. Electric cars include mild and full hybrids (like the Honda Insight and 2010 Ford Fusion, respectively), which combine an internal combustion engine (ICE) power train with supplementary electric motors to run the car at idle and low speeds; plug-in hybrids and range-extended electric vehicles (such as the next-generation Prius and General Motors' Chevrolet Volt, respectively), which combine electric motors with a supplementary ICE to run the car after the batteries have been depleted; and fully electric vehicles (like the Mitsubishi i MiEV and upcoming Nissan Leaf), which can only be recharged by plugging into the power grid.

Under the most likely scenario of the industry's evolution, BCG estimates that 26 percent of the 54.5 million new cars sold in 2020 in the major developed markets (China, Japan, the United States, and Western Europe)— or some 14 million cars — will have electric or hybrid power trains. Of those 14 million cars, some 1.5 million will be fully electric, 1.5 million will be range extenders, and 11 million will be a mix of mild and full hybrids. In that same year, the market for EV batteries in those regions will be worth some $25 billion, BCG predicts.