The price of lithium-ion battery packs has dropped 14% to a record low of $139/kWh, according to analysis by research provider BloombergNEF (BNEF). This was driven by raw material and component prices falling as production capacity increased across all parts of the battery value chain, while demand Contact online >>
The price of lithium-ion battery packs has dropped 14% to a record low of $139/kWh, according to analysis by research provider BloombergNEF (BNEF). This was driven by raw material and component prices falling as production capacity increased across all parts of the battery value chain, while demand growth fell short of some industry expectations.
For battery electric vehicle (BEV) packs, prices were $128/kWh on a volume-weighted average basis in 2023. At the cell level, average prices for BEVs were just $89/kWh.
Our researchers forecast that average battery prices could fall towards $80/kWh by 2026, amounting to a drop of almost 50% from 2023, a level at which battery electric vehicles would achieve ownership cost parity with gasoline-fueled cars in the US on an unsubsidized basis.
After a difficult couple of years which saw the trend of falling lithium battery prices temporarily reverse, a 14% drop in lithium-ion (Li-ion) battery pack cost from 2022-2023 has been recorded by BloombergNEF.
The market research and analysis group has published the new edition of its annual survey of battery pricing, finding that prices have been falling again this year after "unprecedented price increases" in 2022.
Meanwhile, demand for batteries across the electric vehicle (EV) and battery energy storage system (BESS) markets will likely total 950GWh globally in 2023, according to BloombergNEF.
On average, pack prices fell 14% from 2022 levels to a record low of US$139/kWh this year. This reduction was driven by the dynamics of falling raw material and component prices, and increases in production capacity.
However, despite the good news, BloombergNEF (BNEF) no longer expects to find average pack prices fall below US$100/kWh by 2024 (as it predicted in 2020), nor by 2026 (as it predicted last year). It will however be likely to happen before the end of this decade, with BNEF forecasting that the average pack will cost about US$113/kWh in 2025, and decline in cost sharply to around US$80/kWh by 2030.
Perhaps unsurprisingly, the cheapest battery packs are to be found in China, given the country''s massive scale of manufacturing and involvement across the whole value chain from materials processing to finished products, as well as its early adopter advantage in terms of tech development and knowhow.
Packs in China were found to be at an average of US$126/kWh while packs made in the US and Europe were 11% and 26% higher respectively. With both the US and Europe battling to become significant players in the battery value chain, the higher prices reflects the relative immaturity of their industries, as well as the fact that China''s many manufacturers are now competing with each other on price, BNEF said.
In May, commodity price reporting agency Fastmarkets said that it expected nickel manganese cobalt (NMC) Li-ion battery pack prices to fall below US$100/kWh in 2027, and lower-cost lithium iron phosphate (LFP) packs to hit the sub-US$100 threshold even sooner, by 2025.
Again, Fastmarkets noted that those price points could be hit quicker in China, while Fastmarkets Battery Raw Materials Analyst Jordan Roberts said lithium carbonate prices would remain elevated over 2023, but wouldn''t go back up to the peak prices seen last year.
It has been "another year where battery prices closely followed raw material prices," and the dynamics of why and how prices are falling have shifted, according to BNEF analyst Evelina Stoikou.
"In the many years that we''ve been doing this survey, falling prices have been driven by scale learnings and technological innovation, but that dynamic has changed," Stoikou said.
"The drop in prices this year was attributed to significant growth in production capacity across the value chain in combination with weaker-than-expected demand."
BNEF forecasted that 2024 will see pack prices drop to US$133/kWh, based largely on an expectation that lithium, nickel and cobalt costs will drop again, according to miners and metals traders it surveyed for its new report.
With both the EV industry and stationary storage sectors increasingly adopting batteries with LFP cathode chemistry, LFP pack average prices were found to be US$130/kWh and LFP cells at US$95/kWh. LFP is now just less than 1/3 (32%) cheaper than NMC.
Another interesting aspect of the changing dynamic from 2022 to 2023''s edition of the BNEF survey is that although LFP is a lower cost cathode chemistry than NMC, the portion of lithium carbonate used in its production is much higher than it is in NMC. That meant when lithium carbonate prices spiked last year, the cost of LFP went up faster than its legacy rival''s.
“Large markets like the US and Europe are building up their local cell manufacturing and we''re keenly watching how production incentives and tightening regulations on critical minerals will impact battery prices.”
Those efforts at localisation would add complexity to regional battery pricing dynamics in the coming years. The US’ Inflation Reduction Act and Bipartisan Infrastructure Law legislation is seeing billions of dollars being pumped into battery value chain investment, while just a few days ago, lawmakers in the European Union (EU) approved the start of negotiations on the Net Zero Industry Act, the bloc’s response to the US’ pace-setting legislation.
Energy-Storage.news'' publisher Solar Media will host the 9th annual Energy Storage Summit EU in London, 21-22 February 2024. This year it is moving to a larger venue, bringing together Europe''s leading investors, policymakers, developers, utilities, energy buyers and service providers all in one place. Visit the official site for more info.
The high-voltage battery is the lifeblood of an electric vehicle. However, concerns about the long-term health of an EV battery and the potential high cost of replacing it, especially on a used model, may deter many buyers from going electric. However, a silent revolution is underway in the world of battery manufacturing. That revolution is focused on increasing the energy density of batteries and improving their durability, all of which is poised to impact their replacement costs and second-life values, as per a new report from battery health and data start-up Recurrent.
Battery replacements are rare. Automakers generally offer a warranty of eight years or 100,000 miles on the pack. Most modern batteries can last twice as long and go double the distance, according to Recurrent. And that''s a conservative estimate. Tesla owners frequently report driving over 200,000 miles in their EVs, that too with minimal degradation. There''s even a 1.2 million-mile Model S out there that has undergone four battery replacements—bringing the average replacement mileage to a whopping 300,000 miles.
Most of us won''t go to such extremes. But in the rare case that you do require a replacement for whatever reason, how much will it cost in the future? Assuming the industry continues to proliferate at the same pace, Recurrent has an answer: astonishingly low!
Citing data from climate research firm RMI, Recurrent estimates that cell prices could reach $35 per kWh by the end of the decade. This would translate to pack prices of $50 per kWh, bringing the replacement cost of a 100 kWh battery to $4,500–$5,000, or about $3,375 for a 75 kWh pack. These estimates put EV battery replacement costs on par with replacing an internal combustion engine. J.D. Power says engine replacement can cost between $4,000 for a four-cylinder unit and more than $10,000 for a high-performance one. How those prices evolve down the line remains to be seen.
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