Electric car battery prices just increased — for the first time in more than a decade. Keeping with the current trend of rising raw material costs, battery packs have increased in price to $151 (all figures in US dollars) per kilowatt hour, a 7 per cent rise compared with a year ago, according to BloombergNEF’s annual lithium-ion battery price survey. The company has also warned that prices will likely rise further to $152 per kWh next year.
Compared with 2010, a time when battery packs cost upwards of $1,000 per kWh, batteries remain exponentially more affordable. However, the recent increase sets us back further from the previously established $100 per kWh goalpost, which is the estimated benchmark for EVs to hit price parity. In other words, batteries need to be more affordable for EVs to become truly competitive with traditional, combustion engine vehicle, especially in a global economy showing increasing signs of downturn.
This price increase can be attributed to the rising costs of raw battery materials, including lithium, nickel, and cobalt. Notably, encroaching battery costs could also be problematic for the economics of battery energy storage projects that Bloomberg notes are “vital to stabilizing the grid as intermittent renewable power grows.”
“Amidst these price increases for battery metals, large battery manufacturers and automakers have turned to more aggressive strategies to hedge against volatility, including direct investments in mining and refining projects,” shared Evelina Stoikou, an energy storage associate at BloombergNEF. Notably, the average battery price would be even higher if not for the shift to lower-cost lithium iron phosphate (LFP) batteries, which forgo the use of nickel and cobalt. This year, LFP batteries are expected to account for around 40 per cent of global EV sales.
“This will negatively impact the ability for automakers to produce and sell mass-market EVs in areas without subsidies”, Bloomberg said, noting that the $100 per kWh benchmark is now not likely to become a reality until 2026.