Electric vehicles nearing tipping point with declining battery costs

Home > Industry Analysis > Content

【Summary】Battery prices for electric vehicles have dropped by nearly 10% in August, reaching a "tipping point" for widespread adoption. Lithium-ion battery cells fell below $100/kWh, a 33% drop since March 2022. This price milestone is crucial for achieving price parity with fossil fuel vehicles. Falling cell prices could also benefit other technologies like solar and wind installations.

FutureCar Staff Sep 20, 2023 9:22 AM PT

Electric vehicles nearing tipping point with declining battery costs

Sign up to our free breaking news emails to receive real-time news alerts straight to your inbox. Simply enter a valid email address and stay updated with the latest news, offers, events, and updates from The Independent. We value your privacy, so please read our privacy notice for more information. Thank you for signing up to the Breaking News email.

According to energy analysts, the cost of batteries has dropped by nearly 10 percent in August, reaching a significant milestone that could accelerate the transition to electric vehicles. The price of lithium-ion battery cells, which are used in various devices from smartphones to space stations, fell below $100/kilowatthour (kWh) last month. This represents a 33 percent decrease since March 2022 and an 8.7 percent decrease compared to the previous month.

Benchmark Mineral Intelligence, an energy analytics firm, compiled the data and highlighted that battery pack prices need to reach $100/kWh for electric vehicles to achieve price parity with fossil fuel-powered 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 making the transition to EVs more attractive for both consumers and automakers. However, the falling cell prices raise concerns for companies investing in cell production outside of China, especially considering the profitability of factories in regions like Europe.

The drop in battery prices is not only significant for the electric vehicle industry but also has implications for other technologies. The report suggests that lower battery prices could benefit solar and wind installations, as they require efficient energy storage during periods of overproduction. This development signals the ongoing energy and transport revolution, according to energy analyst Gerard Reid, who commented on LinkedIn that lithium battery cell prices have dropped below $100/kWh, marking an 80 percent decrease over the past decade. Reid predicts that costs will continue to decrease, leading to better performance and ultimately contributing to the decline of the internal combustion engine.

The decreasing prices of batteries can be attributed to the decreasing costs of raw materials, particularly lithium. Since the beginning of 2023, lithium prices have more than halved, further driving down the overall battery costs. Additionally, recent discoveries of massive lithium deposits, such as the one in the McDermitt caldera on the Nevada-Oregon border, could contribute to the continuous decrease in prices. Geologists estimate that the caldera may contain up to 120 million tonnes of lithium, potentially meeting global battery demand for decades to come.