The cost of lithium-ion batteries has drastically decreased, from $790 per kWh in 2013 to just $139 in 2023, according to BloombergNEF. This sharp decline has been driven by reduced raw material costs and a stabilizing demand for electric vehicles (EVs).
- Lithium-Ion Dominance: Remains the preferred choice for EV batteries.
- Rise of Lithium-Iron Phosphate (LFP): A more affordable and safer option that is gaining popularity.
BloombergNEF cites several reasons for the falling battery prices:
1. Increased Production Capacity: Expansion in infrastructure throughout the battery value chain.
2. Reduced Material Costs: Lower prices for essential components.
3. Modest Demand Growth: EV battery demand did not rise as high as anticipated.
EV sales now make up 18% of the global market, with nearly 41 million EVs in use. China is leading in adoption, followed by Europe and the US.
- Battery-Electric Vehicles (BEVs): Current prices are $128/kWh, with cell prices at $89/kWh.
- Global Price Differences: China offers the lowest pack prices, while prices are higher in the US and Europe.
LFP cells provide advantages in safety, longevity, and environmental impact and are 32% cheaper than NMC cells.
Battery prices are expected to fall to $133/kWh next year and further to $80/kWh by 2030, with emerging technologies like solid-state electrolytes and new materials promising more cost efficiency.
In summary, lithium-ion battery prices have plummeted to historic lows due to increased production and stable demand. The emergence of lithium-iron phosphate as a cost-effective alternative presents further opportunities for the EV industry. Continued advancements in battery technology are likely to drive prices even lower.
