The cost of batteries for electric vehicles (EVs) has reached a significant milestone, falling by nearly 10 percent in August. This drop is seen as a “tipping point” in the transition to EVs, as it brings the price of lithium-ion battery cells below $100/kilowatt-hour (kWh). Energy analysts believe that battery pack prices need to reach this threshold for EVs to become price competitive with fossil fuel-burning vehicles.
The decrease in battery prices is attributed to decreasing raw material costs, particularly the declining prices of lithium. In fact, lithium prices have more than halved since the start of 2023. This reduction in price is a result of discovering massive lithium deposits, such as the one found within the McDermitt caldera on the border of Nevada and Oregon. Geologists estimate that this caldera alone could contain up to 120 million tonnes of lithium, which could meet global battery demand for decades.
The implications of these falling battery prices extend beyond EVs. Lower costs create opportunities for other technologies, such as solar and wind installations, which require energy storage during periods of overproduction. With the decreased cost of batteries, it becomes more economically feasible to store excess energy generated by renewable sources.
Furthermore, falling battery prices are a cause for concern for companies investing in cell production outside of China. There are already concerns about the profitability of factories in regions like Europe, and the decreasing cell prices could further impact their competitiveness.
Overall, the decrease in battery prices signifies a significant milestone in the growth of the EV industry. As prices continue to fall and performance improves, the electric vehicle market is set to expand further, making the transition away from internal combustion engines more attractive to both consumers and automakers.
Sources:
– CALLUM/ Nyobolt
– Benchmark Mineral Intelligence