Wednesday, November 30, 2022
News EV Batteries are Coming Down in Price

EV Batteries are Coming Down in Price

Electric vehicles could reach price parity with gasoline powered vehicles due to the decline of battery prices

  • Prices per kilowatt-hour are much lower than they were a couple of years ago

  • This will bring EVs at price parity with gasoline powered vehicles

  • China has the cheapest batteries

Electric vehicles are still more expensive than equivalent internal combustion engines, but this is changing due to cheaper batteries.

The increasing production of lithium-ion battery packs and innovations in this technology are bringing their price down, even if the demand keeps getting higher.

The price for batteries and battery cells is expressed in dollars per kilowatt-hour. The current average price for battery packs is current $132 / kWh but at the same period in 2020, the average was $140 / kWh, which is a decrease of 6% over a year.

Back in 2010, when the very first mainstream electric vehicles were introduced, battery packs averaged $1,200 / kWh, which means prices dropped by 89% in eleven years.

These figures were generated by considering every type of lithium-ion battery packs. If we look only at battery packs used in electric vehicles, the current average price is $118 / kWh and the battery cells themselves are worth around $97 / kWh, meaning that the cells represent 82% of the total price of a battery pack.

The average price for batteries is not the same everywhere however, since China benefits from lower costs per kilowatt-hours, with an average of $111. This means prices in the United States are 40% higher and prices in Europe are 60% higher.

Despite the tendency for prices to come down, some spikes can be seen and prices have been increasing in the second half of 2021, even if prices for the year remain lower than 2020.

Nevertheless, prices for battery packs and cells are expected to continue to decline, which will make electric cars reach price parity with equivalent cars powered by fossil fuels.

Nissan Ariya | Photo: Louis-Philippe Dube

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