Electric cars reach tipping point battery prices plummet

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【Summary】Battery prices for electric cars have dropped nearly 10% in August, reaching a key milestone that is seen as a "tipping point" for the transition to electric vehicles. The price of lithium-ion battery cells fell below $100/kWh, a 33% drop since March 2022. This drop in prices could lead to price parity between electric vehicles and fossil fuel-burning vehicles, making the transition more attractive for consumers and automakers.

FutureCar Staff Sep 20, 2023 6:19 AM PT

Electric cars reach tipping point battery prices plummet

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In a significant development for the electric vehicle industry, the cost of batteries dropped by nearly 10 percent in August. This decline has surpassed a crucial milestone that energy analysts consider a "tipping point" to accelerate the transition to electric vehicles. Specifically, the price of lithium-ion battery cells, which power various devices from smartphones to the International Space Station, fell below $100/kilowatthour (kWh) last month. This represents a 33 percent decrease from March 2022 and an 8.7 percent drop on a month-on-month basis.

Benchmark Mineral Intelligence, an energy analytics firm, compiled these figures and highlighted the importance of battery pack prices reaching $100/kWh for electric vehicles to achieve price parity with fossil fuel-burning vehicles. Evan Hartley, an analyst at Benchmark, stated that the declining cell prices could enable manufacturers to sell mass-market electric vehicles at comparable prices to internal combustion engine vehicles, thereby improving the appeal of the EV transition for consumers and automakers. There is particular concern for companies investing in cell production outside of China, especially given the existing worries about the profitability of factories in regions like Europe.

The report also emphasized that the decrease in battery prices could have implications for other technologies, such as solar and wind installations that require energy storage during periods of overproduction. Gerard Reid, an energy analyst, expressed his thoughts on LinkedIn, stating that the energy and transport revolution is ongoing. He highlighted that lithium battery cell prices have now fallen below $100/kWh, marking an 80 percent decline over the past decade. Reid predicts even lower costs and improved performance in the future, suggesting that the demise of the internal combustion engine is imminent.

The decline in battery prices can be attributed to decreasing raw material costs, particularly the significant drop in lithium prices, which have more than halved since the beginning of 2023. Furthermore, recent discoveries of massive lithium deposits, notably within an extinct supervolcano on the Nevada-Oregon border known as the McDermitt caldera, could contribute to further price reductions. Geologists estimate that the caldera may contain up to 120 million tonnes of lithium, potentially meeting global battery demand for many decades to come.