Electric Vehicle Battery Prices Fall Below $100/kWh for the First Time in History

Electric vehicle (EV) battery prices have fallen below $100/kWh for the first time in history. BloombergNEF reports that battery pack prices will fall to an average of $97/kWh in 2024. This figure reflects the cost of the entire pack, including battery cells, cables, electronics, and housing.

Experts analyzed the main factors as improvements in battery productivity and technology. They also pointed out that low raw material prices and overcapacity in Chinese factories contributed significantly to this decline. In particular, the spread of cheap lithium iron phosphate (LFP) variants appears to have significantly lowered the average price.

BloombergNEF and market experts forecast that battery prices will likely fall further after 2025. However, there are regional differences. In Europe, battery pack prices are about 50% higher than in China, and batteries remain the most expensive component in EVs. The prevailing opinion is that even in Europe, this price decline will likely lead to lower EV prices.

The price difference is also noticeable based on battery capacity. The typical battery capacity for compact EVs is between 40 and 80 kWh, while batteries over 100 kWh are used in expensive large EVs. Therefore, the larger the battery capacity, the greater the impact on the vehicle price.

Looking at the battery price trend in recent years, many predicted it would average $139 in 2023, $115 in 2024, and fall below $100 in 2026. However, this decline has occurred faster than expected. This trend is expected to be a significant turning point in narrowing the price gap between electric and internal combustion engine vehicles.

However, we should not overlook that despite the decline in battery prices, new supply chain issues may arise due to increased demand.