fall battery Pricing has been one of the most consistent trends in the electric vehicle industry over the past decade. Prices have fallen from well over $1,000 per kilowatt-hour in 2010 to $141 last year. It kick-started one of the biggest changes in the auto industry of the last century, prompting automakers to pour billions of dollars into EVs.
BloombergNEF’s annual lithium-ion battery price survey shows average pack prices will rise 7% in real terms in 2022, and that trend has stopped this year. It was the first increase in the history of the survey.
There are several factors driving the rise, but one of the most important is the rising cost of materials such as cobalt, nickel and lithium. Nickel and cobalt prices have fallen in recent months, and lithium prices may change soon, but both are still higher than they have been in years. This is due to the surge in battery demand and the time delay before new supplies come online.
Without the move to low-cost nickel- and cobalt-free lithium iron phosphate (LFP) batteries, average battery prices would have been even higher. LFP batteries have gained significant market share over the past three years, and BloombergNEF expects his LFP batteries to account for about 40% of global EV sales this year. Battery makers’ profit margins have also fallen this year, suggesting they have absorbed some of the higher costs of materials and components.
To calculate the average price, BNEF collected approximately 200 survey data points from buyers and sellers of lithium-ion batteries used in passenger EVs, commercial vehicles, buses and stationary storage applications. The headline numbers are volume-weighted averages, so they hide a lot of variation by region and application. The lowest recorded price was $131 per kWh for electric buses and commercial vehicles in China. The average pack price for a fully electric passenger car was $138 per kWh.
On a regional basis, the pack price was lowest in China at $127 per kWh. US and European packs were 24% and 33% higher, respectively.
The big question is what happens next. BloombergNEF’s energy storage team expects prices to continue to rise next year, slightly higher than 2022 levels in real terms. Additionally, the team expects prices to begin to fall again in 2024 as raw material availability increases, supply chain pressure eases, and next-generation battery technology and pack designs enter the vehicle mix. doing.
$100 per kWh is often cited as a benchmark when EVs reach price parity with conventional vehicles. Based on the latest estimates of battery learning rates from this year’s study, BNEF predicts that the average price of packs will drop below that threshold by his 2026. This is two years behind previous estimates.
Note, however, that $100 per kWh is a nominal figure that has been around for more than a decade, especially given that inflation has increased almost all costs over the past 18 months. please. The average new car transaction price in the US soared to a record high of over $48,000 this year. EVs are raising transaction prices a bit, but the cost of manufacturing vehicles with internal combustion engines is also rising.
EV price parity is better thought of as a range than a fixed threshold. With today’s battery prices, some vehicle segments can be fully electrified cost-effectively without subsidies. Premium electric cars, for example, are already arguably priced on par with internal combustion models, as are Chinese mini city cars, with EV options starting at just $5,000. For commercial vehicles such as buses and delivery vans, where total cost of ownership is most important, it is already equal or very close, depending on region and usage patterns.
Battery prices will have to fall further to allow more mid-markets to be electrified in this decade. That’s definitely still achievable, but it will require much more investment in all areas of the battery supply chain, not just R&D and manufacturing process improvements.