The price of batteries is one of the biggest factors affecting the growth of electric vehicles (EVs) and energy storage. Over the past decade, battery prices have fallen drastically, making EVs more affordable and energy storage more viable. But how much have these prices actually dropped? And what does the future hold for battery costs?
1. In 2020, the average lithium-ion battery pack price was $137 per kWh
Back in 2020, the cost of lithium-ion battery packs had fallen to $137 per kilowatt-hour (kWh). This was a massive drop from a decade earlier, when battery costs were over $1,000 per kWh. The decrease was due to improvements in manufacturing, better materials, and economies of scale.
Lower battery costs made EVs cheaper and encouraged automakers to invest more in electric technology. It also allowed energy storage systems to become more affordable, helping renewable energy projects store excess power more efficiently.
2. Battery prices fell 89% from 2010 to 2020
Between 2010 and 2020, battery prices dropped nearly 90%. This dramatic decrease was a game changer for the electric vehicle industry.
Ten years earlier, EVs were extremely expensive, with batteries making up the majority of the cost. But as battery prices declined, EVs became more accessible to the average consumer.
This price drop also benefited industries like grid energy storage, which relies on large-scale batteries to store renewable energy. Governments and private companies started investing more in battery production, further driving down costs.
3. By 2023, battery prices dropped to around $139 per kWh due to supply chain issues but were expected to resume declining
The Unexpected Slowdown in Cost Reductions
For years, battery prices were on a steady downward trajectory. Manufacturers optimized production, raw material costs eased, and new technologies unlocked efficiencies. But 2023 threw a wrench in that momentum.
Battery pack prices fell to roughly $139 per kilowatt-hour, but the decline was slower than anticipated. The reason? Supply chain disruptions.
Raw material shortages, geopolitical tensions, and increased demand for critical minerals like lithium, nickel, and cobalt led to price spikes. Battery makers found themselves squeezed—unable to pass costs to consumers while struggling to maintain margins.
Businesses relying on cheaper batteries—whether automakers, energy storage providers, or renewable energy firms—had to rethink their strategies. But this temporary price plateau wasn’t a sign of long-term stagnation.
4. BloombergNEF predicted battery prices would fall below $100 per kWh by 2024-2025
What This Means for the EV and Energy Storage Market
A drop below $100 per kilowatt-hour (kWh) is more than just a milestone—it’s a tipping point that can reshape entire industries. At this level, electric vehicles (EVs) can achieve price parity with gasoline-powered cars, making EVs the default choice for many consumers. For energy storage companies, lower battery costs mean more scalable and profitable solutions, driving broader adoption in both residential and commercial markets.
Businesses that rely on transportation, energy management, and grid storage should see this as a wake-up call. The time to prepare for this new era isn’t in 2025—it’s right now.
5. The $100 per kWh threshold is considered the tipping point for EVs to achieve cost parity with gasoline cars
Once battery prices hit $100 per kWh, the total cost of an EV will be on par with—or even lower than—that of a gasoline car. This is the point where EVs will likely dominate the market, as they already have lower running and maintenance costs.
Car manufacturers are pushing hard to reach this goal by improving battery chemistry, increasing production efficiency, and securing more raw materials. By making EVs cost-competitive, the shift away from fossil fuels will accelerate.
6. In 2010, battery pack prices were approximately $1,200 per kWh
Just over a decade ago, batteries were incredibly expensive, costing around $1,200 per kWh. This made electric vehicles impractical for most people. Early EVs had limited range, high prices, and were seen as niche products rather than mainstream alternatives to gas cars.
The sharp decline in battery costs over the years has fueled massive growth in the EV industry, proving that technological improvements and mass production can drive down costs dramatically.
7. By 2030, battery pack costs are expected to drop to around $56-$80 per kWh
Looking ahead, analysts expect battery costs to fall even further, reaching $56-$80 per kWh by 2030. If this happens, EVs will become significantly cheaper than gasoline cars, making them the clear choice for consumers.
This will also impact energy storage, making home and grid-scale battery solutions far more affordable. It will encourage more people to install solar panels and battery systems in their homes, reducing dependence on traditional energy grids.
8. Tesla’s battery costs were estimated to be around $100 per kWh in 2021
Tesla has been a leader in battery cost reduction, with its battery packs reportedly reaching around $100 per kWh as early as 2021. The company’s innovations in battery technology, manufacturing processes, and raw material sourcing have played a major role in lowering costs.
Tesla’s success has put pressure on other automakers to catch up, driving competition and leading to further reductions in battery prices.
9. Solid-state battery technology could lower costs to $50 per kWh by 2030
One of the biggest breakthroughs in battery technology is solid-state batteries. These batteries promise higher energy density, faster charging times, and lower costs. Experts predict that solid-state batteries could bring prices down to as low as $50 per kWh by 2030.
Automakers like Toyota, Volkswagen, and Ford are investing heavily in this technology, hoping to revolutionize the EV industry. If successful, solid-state batteries could make EVs more affordable and increase their range significantly.
10. The Inflation Reduction Act in the U.S. has provided incentives that could further reduce battery costs
Government policies play a huge role in battery pricing. The Inflation Reduction Act in the U.S. introduced incentives for domestic battery production, encouraging companies to build more factories and reduce reliance on foreign suppliers.
These incentives aim to make batteries cheaper and ensure a stable supply chain, ultimately helping consumers get more affordable EVs and energy storage solutions.
11. CATL, the world’s largest battery maker, announced a 50% cost reduction target by 2027
CATL, the leading battery manufacturer, announced an ambitious plan to cut battery costs by 50% by 2027. If achieved, this will significantly lower the price of EVs and energy storage systems.
The company is investing in new technologies, increasing production capacity, and improving supply chain efficiency to meet this goal. Their advancements will likely set new industry standards and push other manufacturers to follow suit.
12. The price of battery-grade lithium carbonate peaked at over $70,000 per ton in 2022 but has since dropped significantly
The cost of raw materials like lithium plays a huge role in battery pricing. In 2022, battery-grade lithium carbonate prices surged past $70,000 per ton, causing temporary price hikes in batteries.
Since then, prices have stabilized, thanks to increased mining efforts and new extraction technologies. As lithium supply grows, battery prices are expected to continue their downward trend.
13. NMC (Nickel-Manganese-Cobalt) batteries had higher costs compared to LFP (Lithium-Iron-Phosphate) batteries
Not all batteries are created equal, and chemistry plays a huge role in cost differences. NMC (Nickel-Manganese-Cobalt) batteries were once the industry standard for EVs due to their high energy density and longer driving range.
However, they also had higher costs because cobalt and nickel are expensive and prone to price fluctuations.
In contrast, LFP (Lithium-Iron-Phosphate) batteries gained popularity due to their lower cost and longer cycle life.
Many automakers, including Tesla, have started using LFP batteries for standard-range models because they provide a good balance between performance and affordability. As LFP production scales up, battery costs are expected to drop even further.
14. LFP batteries became dominant in 2023 due to their lower costs, reaching below $100 per kWh
Why Businesses Are Embracing LFP Batteries Now More Than Ever
In 2023, the cost of lithium iron phosphate (LFP) batteries finally dropped below the long-anticipated $100 per kWh threshold, a tipping point that reshaped the electric vehicle (EV) and energy storage landscape.
This price milestone wasn’t just a number—it signified a fundamental shift in how businesses evaluate battery investments. Lower costs meant wider adoption, and suddenly, LFP batteries weren’t just an alternative; they were the preferred choice.
For businesses, this transition is more than just about affordability. Companies involved in EV manufacturing, energy storage solutions, and even commercial fleets are now benefiting from lower capital expenditures, longer battery lifespans, and reduced operational risks.
The era of costly battery technology creating financial roadblocks is rapidly fading.
15. The cost of raw materials accounts for 60% of battery prices
Why Raw Materials Dominate Battery Costs
Batteries might seem like advanced technology, but at their core, they are materials-heavy products. The fundamental building blocks—lithium, nickel, cobalt, graphite, and manganese—make up the majority of the cost.
Unlike manufacturing efficiencies or design optimizations, raw material costs are harder to control because they depend on global supply chains, mining regulations, and geopolitical factors.
For businesses in the EV and energy storage industries, this means that material price volatility directly impacts profitability. When the price of lithium spikes, battery costs surge. When nickel supplies tighten due to global trade restrictions, manufacturers face cost pressure.
Understanding this cost structure isn’t just about tracking trends—it’s about strategic planning.
16. Energy storage system battery prices dropped from around $600 per kWh in 2015 to around $150 per kWh in 2023
It’s truly remarkable how quickly the energy storage landscape has changed. Just a few years ago, the idea of widely accessible, affordable battery storage seemed like a distant dream. But the numbers don’t lie.
From a hefty $600 per kWh in 2015 to a much more palatable $150 per kWh in 2023, we’ve witnessed a dramatic reduction in battery costs. This isn’t just a statistic; it’s a game-changer for businesses involved in energy storage.
Unlocking New Market Opportunities
This significant price drop directly translates to expanded market potential. Suddenly, projects that were previously financially unviable become attractive investments.
Think about it: residential energy storage becomes more accessible to homeowners, commercial businesses can implement more robust backup power solutions, and large-scale grid stabilization projects become more economically feasible.
This opens doors for businesses to explore new applications, cater to a wider range of customers, and develop innovative energy storage solutions that were previously out of reach.
Increased Profit Margins and Competitive Edge
For businesses already operating in the energy storage sector, the reduced battery costs mean improved profit margins. The core component of your system, the battery, is now significantly cheaper.
This allows you to offer more competitive pricing to your customers, potentially capturing a larger market share. Furthermore, you can reinvest these cost savings into research and development, enhancing your products and staying ahead of the competition.
17. Recycling and second-life battery programs could reduce costs by 30% by 2030
As battery production ramps up, so does the need for sustainable solutions. Recycling and second-life battery programs are emerging as a way to cut costs and reduce waste.
By reusing materials from old batteries, manufacturers can lower production costs and reduce the demand for newly mined materials.
Second-life batteries, which repurpose EV batteries for energy storage, are also gaining traction. These initiatives could reduce battery costs by up to 30% by 2030, making EVs and energy storage even more affordable.
18. The average cost reduction rate per year from 2010 to 2020 was approximately 13%
How the 13% Cost Decline Transformed the EV and Energy Storage Market
From 2010 to 2020, battery prices fell at an average rate of 13% per year, marking one of the most significant technological cost declines in modern history.
This steady drop wasn’t just an incremental improvement—it was a fundamental shift that fueled the rapid expansion of electric vehicles (EVs) and energy storage solutions worldwide.
For businesses, this decline wasn’t just about affordability. It reshaped supply chains, manufacturing strategies, and competitive positioning. The ability to anticipate and respond to this annual cost reduction was a decisive factor in determining which companies led the market and which struggled to keep up.
19. Sodium-ion batteries, an emerging alternative, could be 30-50% cheaper than lithium-ion batteries by 2030
The prospect of sodium-ion batteries offering a 30-50% cost reduction compared to lithium-ion by 2030 is nothing short of revolutionary.
This isn’t just a minor cost saving; it’s a fundamental shift in the economics of energy storage. For businesses, this translates to tangible opportunities to disrupt existing markets and create entirely new ones.
Strategic Diversification and Supply Chain Resilience
One of the most compelling aspects of sodium-ion batteries is their potential to diversify the battery supply chain.
Lithium, a key component of lithium-ion batteries, is geographically concentrated, leading to potential supply chain vulnerabilities. Sodium, on the other hand, is abundant and widely distributed, offering greater supply chain resilience.
Businesses should strategically explore partnerships with manufacturers and suppliers of sodium-ion battery components to secure a stable and cost-effective supply chain.
This diversification not only mitigates risk but also provides a competitive advantage in a market increasingly sensitive to supply chain disruptions.
20. Tesla’s 4680 battery cells aim to cut costs by 50% compared to traditional lithium-ion cells
Tesla’s ambitious goal of slashing battery costs by 50% with their 4680 cells isn’t just a headline; it’s a potential seismic shift in the battery landscape.
This development has far-reaching implications for businesses beyond the electric vehicle sector, impacting energy storage, manufacturing, and supply chains.
Driving Innovation Through Manufacturing Efficiency
The 4680 cell’s design focuses heavily on improving manufacturing efficiency. The larger cell format and simplified manufacturing process aim to reduce production costs and increase throughput. Businesses can learn from this approach by focusing on streamlining their own manufacturing processes.
This includes investing in automation, optimizing production lines, and adopting lean manufacturing principles. By prioritizing efficiency, companies can unlock significant cost savings and enhance their competitiveness.
Exploring the Potential for Diverse Applications
While initially designed for electric vehicles, the 4680 cell’s potential extends to various applications, including stationary energy storage. The lower cost and improved performance could make it an attractive option for grid-scale storage, residential energy storage, and industrial backup power systems.
Businesses should explore how they can leverage the 4680 cell’s technology in their own product development. This may involve partnering with Tesla or developing compatible systems that utilize the 4680 cell’s advantages.
21. China’s battery manufacturing scale has helped reduce global battery prices by 10-15% in recent years
China’s sheer scale in battery manufacturing has undeniably driven down global battery prices, impacting the entire industry. This isn’t merely a market trend; it’s a strategic reality that businesses must understand and adapt to.
Leveraging Strategic Partnerships for Cost Optimization
Recognizing China’s manufacturing prowess, businesses can strategically explore partnerships with Chinese battery manufacturers and suppliers. This isn’t about blind dependence; it’s about leveraging existing infrastructure and expertise to optimize costs.
This could involve joint ventures, contract manufacturing agreements, or strategic sourcing arrangements. However, due diligence and careful negotiation are paramount to ensure quality control and protect intellectual property.
Diversifying Supply Chains for Risk Mitigation
While partnering with Chinese manufacturers can offer cost advantages, businesses must also prioritize supply chain diversification. Over-reliance on a single region can expose companies to geopolitical risks, trade disruptions, and potential supply shortages.
Building a diversified supply chain involves exploring alternative manufacturing locations, developing relationships with multiple suppliers, and investing in localized production capabilities where feasible. This strategy fosters resilience and reduces vulnerability to external shocks.
22. Battery production gigafactories are expected to bring a 20-30% cost reduction by scaling production
Large-scale battery manufacturing plants, known as gigafactories, are helping to cut costs through mass production. As more of these facilities come online, battery prices are expected to drop by 20-30%.
Gigafactories also help stabilize supply chains by reducing dependency on a few key regions. Countries like the U.S. and Europe are now investing heavily in domestic gigafactories to support their growing EV industries.
23. Volkswagen aims to cut battery costs for its EVs by 50% by 2030
Volkswagen’s declared goal of halving EV battery costs by 2030 isn’t just a company initiative; it’s a potential industry-wide catalyst. This target signals a fundamental shift in how battery technology is developed, manufactured, and integrated into vehicles and energy storage systems.
Standardizing Cell Design for Scalability and Efficiency
A key element of Volkswagen’s strategy is the standardization of cell design. This approach aims to achieve economies of scale and simplify manufacturing processes. Businesses can learn from this by focusing on modularity and standardization in their own product development.
This allows for greater flexibility in manufacturing, easier integration into different systems, and reduced costs through mass production. This push for standardization will affect not only the automotive sector, but also the wider energy storage sector with the ability to leverage similar cells for various applications.
Vertical Integration and Strategic Partnerships
To achieve its cost reduction goals, Volkswagen is pursuing vertical integration and forging strategic partnerships across the battery supply chain. This includes investing in battery cell production, securing access to raw materials, and collaborating with technology providers.
Businesses can adopt a similar approach by building strong relationships with key suppliers, investing in strategic acquisitions, or forming joint ventures. This ensures greater control over the supply chain and allows for better coordination and cost optimization.
24. The European Union’s battery supply chain policies could impact global battery pricing
The European Union’s proactive approach to battery supply chain policies is poised to significantly influence global battery pricing and market dynamics. This isn’t just regional regulation; it’s a potential blueprint for sustainable and responsible battery production worldwide.
Establishing a Circular Economy for Batteries
The EU’s focus on a circular economy for batteries is a game-changer. This includes mandates for battery recycling, material recovery, and responsible sourcing. Businesses must adapt to these regulations by implementing closed-loop recycling systems, ensuring traceability of materials, and prioritizing sustainable manufacturing practices.
This shift towards a circular economy will create new business opportunities in battery recycling and material recovery, while also driving down costs through efficient resource utilization.
25. Battery energy density improvements are expected to increase by 50% by 2030, reducing cost per unit energy
Higher energy density means batteries can store more power in a smaller space, improving efficiency and reducing costs. Experts predict that battery energy density will improve by 50% by 2030.
This will lead to longer-range EVs, lower manufacturing costs, and more compact energy storage systems. Companies are investing in advanced materials and solid-state technology to achieve these improvements.
26. Raw material price volatility caused a temporary slowdown in battery cost reductions in 2022
In 2022, the cost of key materials like lithium and nickel surged, causing a temporary slowdown in battery price declines. Supply chain disruptions and geopolitical tensions added to the challenges.
However, as supply chains improve and alternative materials become available, battery costs are expected to continue their downward trend.
27. Energy storage deployments grew by 50% year-over-year, driving demand and impacting battery costs
The demand for energy storage is rising rapidly, with deployments increasing by 50% year-over-year. This growth is being driven by the need for grid stability, renewable energy storage, and backup power solutions.
Higher demand could put pressure on battery prices in the short term, but increased production capacity should help keep costs down in the long run.
28. Automation in battery manufacturing could reduce costs by 10-20% by 2030
Automation and AI-driven manufacturing processes are making battery production more efficient. By reducing human labor and improving precision, automation could cut battery costs by 10-20% by 2030.
Automakers and battery manufacturers are investing heavily in these technologies to streamline production and maintain cost competitiveness.
29. The share of batteries in total EV costs dropped from 57% in 2015 to around 30% in 2023
The dramatic reduction in the battery’s share of total EV costs, from 57% in 2015 to roughly 30% in 2023, is a pivotal development. This isn’t just a statistical change; it’s a fundamental restructuring of the EV cost equation, opening up new avenues for innovation and business strategy.
Reallocating R&D Focus: Beyond Battery Cost Reduction
With battery costs becoming less dominant, businesses can strategically reallocate their research and development efforts. This means shifting focus towards other critical areas of EV development, such as powertrain efficiency, lightweight materials, advanced software, and user experience.
Investing in these areas can create a competitive edge by improving overall vehicle performance, range, and features. This allows businesses to differentiate themselves in a market that is no longer solely driven by battery cost.
Optimizing System Integration and Vehicle Architecture
The reduced battery cost share allows for greater flexibility in vehicle design and system integration. Businesses can focus on optimizing the entire vehicle architecture to maximize efficiency and performance.
This includes integrating advanced thermal management systems, improving aerodynamics, and developing intelligent energy management software. This holistic approach to vehicle design can lead to significant improvements in range, performance, and overall user experience.
30. By 2035, battery costs could reach as low as $50 per kWh, making EVs even cheaper than traditional gasoline cars
The prospect of battery costs plummeting to $50 per kWh by 2035 isn’t just a cost reduction; it’s a paradigm shift.
This threshold signals a fundamental disruption in the automotive industry, making EVs not just competitive, but unequivocally cheaper than gasoline cars. This opens up a vast array of opportunities for businesses across multiple sectors.
Democratizing Electric Mobility: Expanding Market Reach
At $50 per kWh, EVs will become accessible to a much wider range of consumers, including those in lower-income brackets.
This democratization of electric mobility will create a massive expansion of the EV market, presenting businesses with the opportunity to cater to a previously untapped customer base.
This will require businesses to develop more affordable EV models and explore innovative financing options to make EVs accessible to all.
Redefining Urban Transportation and Infrastructure
The widespread adoption of affordable EVs will reshape urban transportation and infrastructure. This includes the need for increased charging infrastructure, smart grid integration, and urban planning that prioritizes electric mobility.
Businesses should anticipate these changes and develop solutions that address the evolving needs of urban environments. This could involve investing in charging infrastructure, developing smart city technologies, or offering EV-related services like ride-sharing and car-sharing.
wrapping it up
Battery costs have been on a steady decline over the past decade, making electric vehicles and energy storage more affordable than ever before.
From $1,200 per kWh in 2010 to around $137 per kWh in 2020, and with projections of dropping below $100 per kWh in the coming years, the future of battery technology looks incredibly promising.
