Price parity in sight for battery vehicles – BNEF

Battery prices have fallen by 13% year-on-year to $156 per kWh, and by 2023 average prices will likely be approaching the crucial $100 per kWh mark, according to the latest research from Bloomberg New Energy Finance (BNEF). 

Just a decade ago, the costs of lithium-ion batteries were in excess of $1,100 per kWh – meaning they have now fallen a staggering 87% in real terms. Price reductions, BNEF says, are thanks to increased order size, growth in the sales of battery-electric vehicles and the continued penetration of energy-dense cathodes. It’s expected that falling manufacturing costs and new pack designs will soon drive prices even lower. 

BNEF’s Battery Price Survey estimates that as cumulative demand passes 2 TWh in 2024, battery prices will dip below $100/ kWh – widely believed to be the crucial point of ‘price parity’ with combustion engine vehicles. But researchers note that this precise tipping point will depend on where a vehicle is sold and the market segment it is in. 

As batteries become cheaper, more sectors are electrifying. BNEF cites commercial vehicles, such as delivery vans, as an example of a segment that is rapidly turning toward battery power. This switch is expected to lead to further differentiation in cell specifications, analysts say, with commercial and high-end passenger vehicle applications likely to choose cycle life over continued price declines. 

However, for mass-market passenger cars, manufacturers and consumers will continue to chase ever-lower battery prices. These cost declines will come as the result of lower manufacturing spend, new pack designs and optimised supply chains. 

‘Factory costs are falling thanks to improvements in manufacturing equipment and increased energy density at the cathode and cell level,’ explains Logan Goldie-Scot, Head of Energy Storage at BNEF. ‘The expansion of existing facilities also offers companies a lower-cost route to expand capacity.’ 

While BNEF believes the journey to $100/kWh by 2024 looks promising, the Battery Price Survey reveals there is much less certainty as to how prices will be brought down further. The report states that there are a variety of options, and that energy density will play an increasingly important role in the late 2020s. 

New innovations, including silicon or lithium anodes, solid state cells and new cathode materials will also be important in ensuring that further cost reductions materialise.

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