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
After years of steady price declines, battery costs took a slight hit in 2023. The reason? Supply chain disruptions, rising raw material prices, and increased global demand. Lithium and nickel prices spiked, slowing down the expected cost reductions.
However, experts predict that as supply chains stabilize and new battery technologies emerge, prices will continue to fall. Manufacturers are working on alternative battery chemistries and better recycling methods to reduce reliance on expensive raw materials.
4. BloombergNEF predicted battery prices would fall below $100 per kWh by 2024-2025
Industry analysts have long considered $100 per kWh as the magic number for EV cost parity with gasoline cars. BloombergNEF forecasted that this milestone would be reached between 2024 and 2025, thanks to improvements in battery production and supply chain efficiency.
When battery costs fall below this threshold, electric vehicles will become cheaper than gas-powered cars to manufacture, leading to widespread adoption. Consumers will no longer have to pay a premium for EVs, making them a default choice for many buyers.
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
By 2023, LFP batteries had become the preferred choice for many EV manufacturers because they were cheaper and safer than NMC batteries. Their price dropped below $100 per kWh, making them highly competitive.
The rise of LFP batteries has had a major impact on the EV industry. With their lower cost and improved lifespan, more manufacturers are transitioning to this chemistry, helping to make EVs more affordable.
15. The cost of raw materials accounts for 60% of battery prices
One of the biggest factors influencing battery prices is the cost of raw materials. Materials like lithium, nickel, cobalt, and graphite make up about 60% of the total battery cost.
This means that fluctuations in raw material prices can have a direct impact on the cost of EV batteries. Automakers and battery manufacturers are now looking for ways to secure stable supplies, explore alternative materials, and improve recycling processes to reduce dependency on volatile markets.
16. Energy storage system battery prices dropped from around $600 per kWh in 2015 to around $150 per kWh in 2023
Battery storage systems, which are used for storing renewable energy, have also seen dramatic price declines. In 2015, energy storage battery packs cost around $600 per kWh, making large-scale adoption difficult.
By 2023, costs had fallen to about $150 per kWh, making energy storage much more feasible for both homes and businesses. Lower battery costs mean that more homeowners can install solar panels with battery storage, reducing their reliance on the grid and saving money on electricity bills.
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%
Between 2010 and 2020, battery costs declined at an average rate of 13% per year. This steady decline was driven by technological advancements, better manufacturing processes, and increased production capacity.
If this trend continues, we can expect even further cost reductions in the coming years. The rapid pace of innovation means that EVs and battery storage solutions will continue to become more cost-effective for consumers.
19. Sodium-ion batteries, an emerging alternative, could be 30-50% cheaper than lithium-ion batteries by 2030
Sodium-ion batteries are being developed as a cheaper alternative to lithium-ion technology. Sodium is far more abundant and easier to extract than lithium, making it a cost-effective option.
By 2030, sodium-ion batteries could be 30-50% cheaper than lithium-ion batteries, offering another pathway to reduce EV and energy storage costs. Major battery manufacturers like CATL and BYD are already working on sodium-ion battery technology to bring it to market.
20. Tesla’s 4680 battery cells aim to cut costs by 50% compared to traditional lithium-ion cells
Tesla introduced its 4680 battery cells as a way to reduce costs and improve performance. These larger-format cylindrical cells offer higher energy density and lower production costs.
Tesla aims to cut battery costs by 50% with this technology, making EVs even more affordable. If successful, the 4680 cell could be a game-changer for the industry, setting new standards for cost-effective and high-performance batteries.
21. China’s battery manufacturing scale has helped reduce global battery prices by 10-15% in recent years
China dominates global battery production, accounting for over 70% of the world’s lithium-ion battery supply. This massive scale has helped drive costs down by 10-15% in recent years.
By investing in large-scale battery factories and securing raw materials, China has played a major role in reducing battery prices worldwide. Other countries are now trying to build their own battery supply chains to compete.
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 has set an ambitious goal of reducing battery costs by 50% by 2030. The company is focusing on new battery chemistries, solid-state batteries, and in-house production to achieve this target.
By lowering battery costs, Volkswagen hopes to make EVs more accessible to a wider audience and compete more effectively with Tesla and other automakers.
24. The European Union’s battery supply chain policies could impact global battery pricing
The EU is implementing new policies to strengthen its domestic battery industry. These policies aim to reduce dependence on China and secure raw material supplies.
By investing in battery production, the EU hopes to lower costs and ensure a stable supply for European automakers. This could have a ripple effect on global battery pricing as competition increases.
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
Batteries used to be the most expensive part of an EV, making up 57% of the total cost in 2015. By 2023, that number had dropped to about 30%, thanks to declining battery prices.
This means EVs are getting cheaper to produce, bringing them closer to price parity with gasoline cars.
30. By 2035, battery costs could reach as low as $50 per kWh, making EVs even cheaper than traditional gasoline cars
Looking ahead, some analysts predict that battery prices could fall to $50 per kWh by 2035. At this price, EVs will be significantly cheaper than gasoline cars, accelerating mass adoption worldwide.
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.
