Lithium-ion battery pack prices hit record low, tipped to nearly halve again by 2030

The price of lithium ion battery packs have reversed their industry-wide increases of 2022, and are now at a record low of $US139 per kilowatt-hour (kWh), according to research firm BloombergNEF.

In its latest update of pricing moves, BNEF says technical innovation and improvements in manufacturing should help drive battery pack prices down ever further, to $US113/kWh by 2025 and down to $US80/kWh in 2030.

“Battery prices have been on a rollercoaster over the past two years,” said Yayoi Sekine, head of energy storage at BNEF.

“Large markets like the US and Europe are building up their local cell manufacturing and we’re keenly watching how production incentives and tightening regulations on critical minerals will impact battery prices.

“These localization efforts will add a layer of complexity to how battery prices shape up regionally in coming years.”

A combination of rising raw material and battery component prices in tandem with soaring inflation across 2022 led to the first ever increase in lithium-ion battery pack prices since BNEF began tracking the market in 2010.

Following a decade of declines, the volume-weighted average prices for lithium-ion battery packs across all sectors increased to $US151/kWh at the end of 2022. However, nearly a year later, prices have turned on their head, dropping by 14% to a record low of $US139/kWh, or around $A211/kWh, converted.

The drop in price across 2023 was driven by falling prices for raw materials and components and bolstered by increasing production capacity across all parts of the battery value chain.

Also helping matters was a slide in the growth of demand, which fell short of some industry expectations this year. However, BNEF remains confident that battery demand across electric vehicles and stationary storage will continue growth, and that battery pack prices will continue to grow.

“It is another year where battery prices closely followed raw material prices,” said Evelina Stoikou, energy storage senior associate at BNEF.

“In the many years that we’ve been doing this survey, falling prices have been driven by scale learnings and technological innovation, but that dynamic has changed. The drop in prices this year was attributed to significant growth in production capacity across the value chain in combination with weaker-than-expected demand.”

The $US139/kWh average figure spans multiple battery end-uses, including different types of electric vehicles and buses, as well as stationary storage projects.

The average battery EV (BEV) pack price was $US128/kWh on a volume-weighted average basis in 2023, whereas at the cell level, average prices for BEVs were only $US89/kWh.

Regionally, and continuing a trend across the energy transition, average battery pack prices were lowest in China at only $US126/kWh, reflecting intense price competition within China as local battery manufacturers ramped up production capacity in a bid to grab ever larger shares of the growing battery demand.

Conversely, battery pack prices in the United States were 11% higher, and 20% higher in Europe, reflecting the “relative immaturity” of the Western market, higher production costs, lower volumes, and the diverse range of applications.

Maybe most importantly, however, is the evidence of a continued transition from lithium nickel manganese cobalt oxide (NMC) to the lower-cost lithium iron phosphate (LFP) cathode chemistry.

According to BNEF, LFP packs and cells had the lowest global weighted-average prices of $US130/kWh and $US95/kWh, respectively, marking the first time that BNEF has witnessed average LFP cell prices fall below the $US100/kWh mark. Conversely, NMC cells were 32% more expensive.

More good news is that miners and metals traders expect prices for key battery metals like lithium, nickel, and cobalt, to continue easing in 2024, leading BNEF to predict average battery pack prices will drop again in 2024 to $US133/kWh.