The Cost of Batteries Drops, Accelerating the Transition to Electric Vehicles

The cost of batteries has reached a significant milestone that could supercharge the transition to electric vehicles. In August, the price of lithium-ion battery cells dropped by nearly 10 percent, falling below $100/kilowatt hour (kWh). This marks a 33 percent decrease from March 2022 and an 8.7 percent month-on-month drop. Energy analysts consider this price point a “tipping point” for the electric vehicle industry.

Energy analytics firm Benchmark Mineral Intelligence compiled the data and highlighted the importance of battery pack prices reaching $100/kWh. This is the threshold for electric vehicles to reach price parity with fossil fuel-burning vehicles. The decrease in battery prices allows manufacturers to sell electric vehicles at comparable prices to internal combustion engine vehicles, making the transition more attractive for both consumers and automakers.

The declining prices of batteries are also relevant to other sectors. Solar and wind installations, which rely on battery storage during periods of overproduction, could benefit from the lower costs. The dropping prices are attributed to decreasing raw material costs and the discovery of massive lithium deposits. The price of lithium has more than halved since the start of 2023, and the recent discovery of lithium deposits within the McDermitt caldera on the Nevada-Oregon border could potentially meet global battery demand for decades.

The decreasing costs and improving performance of batteries indicate that the internal combustion engine’s days are numbered. With lithium battery cell prices now below $100/kWh and down 80 percent in the past decade, energy analyst Gerard Reid believes that we will witness even lower costs and better performance in the future. As battery prices continue to fall, the transition to electric vehicles and the broader energy and transport revolution will accelerate.

– Benchmark Mineral Intelligence
– LinkedIn