Market: Battery Prices Drop Significantly

The annual battery price survey by BloombergNEF found that prices for lithium-ion batteries fell by 13% compared to 2019. Compared to 2010, this represents a reduction of 89%: Back then, more than $1,100/kWh had to be paid, while in 2020, it was an average of $137/kWh. By 2023, according to BloombergNEF, average prices will fall below the important threshold of $100/kWh - a mark that has already been reached sporadically this year for e-buses in China. On average, the kilowatt costs for e-buses in the Middle Kingdom were, however, $105. At battery prices below $100/kWh, electric vehicles are considered economically equivalent to internal combustion vehicles.

Battery for BEV: $126/kWh

The battery prices for electric passenger cars (BEV) averaged $126/kWh in 2020. At the cell level, they were $100/kWh for BEVs. The battery's share of the total price of an electric car averages 21%. The BNEF battery price survey for 2020, which considers electric cars, e-buses, commercial electric vehicles, and stationary storage, forecasts that average battery prices will be around $101/kWh by 2023. New cathode chemistries and falling manufacturing costs will, however, further reduce prices in the near term. Prices for cathode materials have fallen from their peak in the spring of 2018 and stabilized in 2020.

It is a historic milestone that battery prices of less than $100/kWh have been reported. Within a few years, the industry's average price will fall below this threshold. Furthermore, our analysis shows that even if raw material prices were to return to the highs of 2018, this would only delay average prices of $100/kWh by two years – rather than derailing the industry entirely. The industry is becoming increasingly resilient to changing raw material prices, with leading battery manufacturers leveraging the entire value chain and investing in cathode production or even mining. (James Frith, BNEF Head of Energy Storage Research and lead author of the report)

Gross margins of up to 20%

Leading battery manufacturers now achieved gross margins of up to 20% with a capacity utilization of their plants of over 85%. Maintaining high utilization rates is key to lowering cell and battery prices. If utilization rates were low, the depreciation costs for plants and buildings would be spread over fewer kilowatt-hours of manufactured cells. 

The increasingly diversified chemicals used in the market lead to a wide price range. Battery manufacturers can already mass-produce some chemicals such as lithium-nickel-manganese-cobalt oxide in the form of NMC 955 and lithium-nickel-manganese-cobalt aluminum oxide (NMCA). Lithium iron phosphate (LFP) already achieves cell prices of $80/kWh as a cost-effective alternative. (Daixin Li, Senior Energy Storage Associate at BNEF)

$58/kWh by 2030

By 2030, a battery price of $58/kWh is expected. Solid-state batteries could then, according to BloombergNEF, be manufactured at cell costs of 40% compared to current lithium-ion batteries if produced on a large scale. The savings would result from falling production costs and the introduction of new high-energy-density cathodes.