EV battery prices are plummeting, falling faster than most expected. This year will mark the steepest decline since 2017. With new tech and cheaper alternatives hitting the market, electric vehicles will soon be even more affordable than their gas-powered counterparts.
Electric vehicle prices are quickly closing in on gas-powered cars after the cost of battery packs dropped by 20% in 2024.
According to BloombergNEF’s annual battery price survey, the cost of EV battery packs fell to $115 per kWh in 2024, its largest drop in seven years. The price drop is due to rising cell production, lower material prices, and cheaper LFP batteries hitting the market.
With EV battery prices expected to continue plummeting over the next few years, electric vehicles could soon be even more affordable than comparable gas cars.
According to the survey, average battery prices are expected to slip below $100 per kWh as soon as 2026. This is widely considered the “price parity” threshold with ICE vehicles. By 2030, prices could fall as low as $69 per kWh.
EV battery prices are plummeting faster than expected
The study also points out that geopolitical uncertainties and slower demand could impact pricing. It’s no secret by now that China dominates the global battery market.
“China alone is expected to produce enough battery cells to meet 92% of total global demand of 1.2 terawatt-hours for EV and stationary storage segments in 2024,” the report noted. This has “exerted downward pressure on battery prices.”
Although this is driving EV prices down, overcapacity is becoming a concern. Global battery leaders like BYD and CATL are aggressively cutting prices, fueling the EV battery price war.
Everyone is talking about the EV price war in China, but the battery market is igniting it behind the scenes. The price cuts are pressuring smaller manufacturers to follow suit while sacrificing margins. However, if electric car sales slow, battery makers are more likely to reduce output.
Shifting policies will also likely impact battery pricing. In Europe, Germany and France have already cut subsidies.
Meanwhile, US President-elect Donald Trump’s transition team is reportedly planning to end the $7,500 federal EV tax credit. Trump is also threatening to slap a 60% tariff on imports from China and up to 20% from elsewhere, which would likely lead to higher prices.
“Navigating changing tariff regimes will remain a key challenge for battery suppliers and customers,” the report concluded.
Electrek’s Take
With nearly every automaker and several startups developing cheaper, more efficient batteries, EV prices will likely continue falling over the next few years.
Top comment by Anupreet Singh
This is how government can drive change in a direction where otherwise there will a very slow adoption. By giving incentives early on, impact to the early adopters was cushioned. Now the technology, economies of scale, and free market economics have caught up, those govt subsides can also be gradually phased out. However, we are still not at mass adoption level because of lack of choices available at the lower end. Some govt help will still be needed there. And then come the tarrifs. Instead of putting a sales tax on every American, I'll rather like to see incentives for local manufacturing.
China’s CATL and BYD are dominating the industry with more affordable LFP batteries. According to data from CnEVPost, CATL had a commanding 36.7% share of the global EV battery market through September 2024, BYD was second at 16.4%.
CATL has launched several new battery packs over the years, unlocking more range and faster charging at a lower cost.
With BYD’s next-gen Blade battery due out next year, the EV giant aims to slash costs by 15% compared to its current tech.
Bloomberg is not the only one predicting that EV battery prices will continue plummeting. Goldman Sachs Research predicts prices will fall 50% by 2026 compared to 2023. At that, prices would slip below $80 per kWh, down from $149 per kWh in 2023.
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