In a significant development for the electric vehicle (EV) industry, the cost of batteries dropped by nearly 10% in August, surpassing a crucial milestone that experts believe will boost the transition to EVs. The price of lithium-ion battery cells, which power a range of devices from smartphones to space stations, fell below $100 per kilowatthour (kWh) last month, marking a 33% decline since March 2022 and an 8.7% decrease month-on-month.
Energy analytics firm Benchmark Mineral Intelligence compiled this data and highlighted that battery pack prices need to reach the $100/kWh threshold for EVs to achieve price parity with traditional vehicles running on fossil fuels. As Evan Hartley, an analyst at Benchmark, explains, this decrease in cell prices could stimulate the mass adoption of EVs, making them more appealing to both consumers and automakers.
The declining battery prices also have broader implications for other industries, such as renewable energy. Solar and wind installations that require energy storage during periods of excess production could benefit from this trend. The report suggests that falling battery prices signal progress in the ongoing energy and transportation revolution.
The decline in battery prices is primarily attributed to the reduction in raw material costs, with lithium prices dropping by more than 50% since the beginning of 2023. Additionally, recent discoveries of significant lithium deposits, notably a large deposit within an extinct supervolcano located on the Nevada-Oregon border, are expected to contribute to further price reductions. According to geologists, the McDermitt caldera may contain up to 120 million tonnes of lithium, possibly meeting global battery demand for decades to come.
This development is a major breakthrough for the EV industry, proving that the transition to electric vehicles is becoming increasingly economically viable. With declining battery prices and the promise of even lower costs and better performance in the future, the demise of the internal combustion engine seems imminent.
Sources: Benchmark Mineral Intelligence