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Are electric cars set to get even cheaper next year? Lithium-ion battery packs hit record low prices as industry catches up with demand

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New data from BloombergNEF indicates that the average global price of lithium-ion batteries is at an all-time low.
New data from BloombergNEF indicates that the average global price of lithium-ion batteries is at an all-time low.
Tom White
Senior Journalist
28 Nov 2023
4 min read

It's been years since electric cars have hit the mainstream, and yet the upfront price continues to be the number one concern for potential buyers. It seems the falling price of lithium-ion battery packs over the last year could indicate a trend towards parity.

According to a new report from BloombergNEF, the price of lithium-ion batteries has hit a record low over the course of 2023, to US$139 per kWh, despite a 53 per cent year-on-year surge in demand.

The analysis shows the 14 per cent drop in prices from a high point in 2022 ($161 per kWh) was due to a massive increase in production capacity, as well as softening demand in some parts of the world. To give you an idea of how far the price of lithium-ion battery packs have fallen, Bloomberg's data shows the average price has decreased over a 10-year period from a massive $780 in 2013 to just $139 today.

The better news? BloombergNEF indicates that miners and metals traders it surveyed for the report are expecting prices for essential materials like raw lithium, nickel, and cobalt are set to ease further in 2024. It is expecting a drop to $133/kWh with its current projections anticipating prices as low as $80/kWh by 2030 - at which point many of the world's car manufacturers have committed to being electric only.

Putting this in the context of a long-range 78kWh battery, in 2022 the cost would have been US$12,558, while in 2023 it has dropped to $10,842. By 2030, if the report's predictions ring true, the same battery will cost just $6240.

But it's not all rosy. As cautioned in the report, battery prices could still increase due to tightening regulations on critical materials, as well as localised price increases based on higher energy, equipment, land and labour costs in developed markets.

Image credit: BloombergNEF
Image credit: BloombergNEF

There are also localised government policies in certain places which can have an influence on price. As such, prices for an import-only market like Australia will heavily depend on where a vehicle is sourced from. Even more storied manufacturers like BMW are moving to source cars for the Australian market from China, thanks to new and more advanced production facilities that cut down logistics costs largely to do with sourcing batteries.

This regional price discrepancy already rings true according to the BloombergNEF report, with the average price already as low as $126/kWh in China compared to the $139/kWh global average, thanks to significantly ramped up capacity and competition amongst the big players (in the case of China: CATL and BYD).

China's CATL has become the world's largest battery manufacturer.
China's CATL has become the world's largest battery manufacturer.

The most significant effect on price in the last two years has been thanks to the more widespread adoption of lithium-iron phosphate (LFP) chemistry as opposed to the more expensive nickel manganese cobalt (NMC) chemistry, which was previously more common.

LFP packs and cells are currently 32 per cent cheaper on average than their NMC counterparts, with cell prices for LFP falling below US$100/kWh for the first year on record. It should come as no surprise then, that the most affordable electric cars, like the BYD Dolphin and the MG4, use LFP batteries, and more affordable variants of the popular Tesla Model 3 and Model Y have also moved to LFP, despite Tesla being pioneers of NMC tech in the early days thanks to its partnership with Panasonic on the higher-performance cells.

Even some of the world's most storied manufacturers are moving production to China for ease of battery logistics.
Even some of the world's most storied manufacturers are moving production to China for ease of battery logistics.

BYD, currently the hottest name in new electric cars, specialises exclusively in LFP cells and is one of few manufacturers which makes its own batteries in-house (with a proprietary form-factor it calls the 'Blade Battery'), as opposed to buying them from a supplier. Its Dolphin hatchback is currently the most affordable electric car in Australia, wearing a before-on-roads and incentives price-tag of $38,890 for the base Dynamic variant.

The top five lithium-ion battery suppliers in the world rank as follows: CATL (China), LG Energy Solution (South Korea), BYD (China), Panasonic (Japan), and SK Innovation (South Korea).

BYD's Blade Battery offers the brand economies of scale and uses the more affordable LFP chemistry.
BYD's Blade Battery offers the brand economies of scale and uses the more affordable LFP chemistry.
Tom White
Senior Journalist
Despite studying ancient history and law at university, it makes sense Tom ended up writing about cars, as he spent the majority of his waking hours finding ways to drive as many as possible. His fascination with automobiles was also accompanied by an affinity for technology growing up, and he is just as comfortable tinkering with gadgets as he is behind the wheel. His time at CarsGuide has given him a nose for industry news and developments at the forefront of car technology.
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