The cost of lithium-ion battery cells fell by nearly 10% in August, reaching a significant milestone that is expected to accelerate the adoption of electric vehicles. The price of battery cells dropped below $100/kWh, a 33% decrease from March 2022 and an 8.7% decrease from the previous month.
Energy analysts consider this price point to be a “tipping point” for the electric vehicle transition, as it is the level at which electric vehicles can achieve price parity with fossil fuel-burning vehicles. Battery pack prices need to reach $100/kWh to make electric vehicles more affordable for consumers and attractive to automakers.
Energy analytics firm Benchmark Mineral Intelligence compiled the data and highlighted that falling cell prices can enable manufacturers to sell mass-market electric vehicles at comparable prices to internal combustion engine vehicles, with similar profit margins. This development is expected to improve the attractiveness of electric vehicle adoption for both consumers and automakers.
The decrease in battery cell prices is a concern for companies investing in cell production outside of China, particularly in regions such as Europe where factory profitability is already a concern. However, this trend also has implications for other industries. The dropping prices of battery cells could benefit technologies like solar and wind installations that require energy storage during periods of overproduction.
According to energy analyst Gerard Reid, the decrease in battery prices signifies a continued energy and transport revolution. He predicts that further advancements in cost reduction and performance improvement will accelerate the decline of the internal combustion engine.
The falling prices of battery cells can be attributed to decreasing raw material costs, particularly the significant decrease in lithium prices over the past year. The discovery of massive lithium deposits, including those within the McDermitt caldera on the Nevada-Oregon border, further indicates potential for continued price reduction. Experts estimate that the McDermitt caldera alone could meet global battery demand for decades with its potential lithium reserves of up to 120 million tonnes.
Sources: Benchmark Mineral Intelligence
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