The cost of batteries fell by nearly 10% in August, passing a significant milestone that is expected to accelerate the transition to electric vehicles. The price of lithium-ion battery cells dropped below $100/kWh, a 33% decrease from March 2022 and an 8.7% decrease from the previous month. This price reduction is considered a “tipping point” by energy analysts, as it brings electric vehicles closer to price parity with fossil fuel-burning vehicles.
Benchmark Mineral Intelligence, an energy analytics firm, compiled these figures and highlighted the significance of reaching $100/kWh. Electric vehicles can be sold at comparable prices to internal combustion engine vehicles with the same profit margin, making the transition more attractive for both consumers and automakers. However, this price decrease raises concerns for companies investing in cell production outside of China, particularly in regions like Europe where profitability is already a concern.
The impact of decreasing battery prices goes beyond electric vehicles. The report suggests that it could benefit other technologies, such as solar and wind installations that require energy storage during periods of excess production. Gerard Reid, an energy analyst, commented that these falling prices are a sign of an ongoing energy and transport revolution, with lithium battery cell prices now below $100/kWh, down 80% in a decade. He believes that lower costs and improved performance will further accelerate the decline of the internal combustion engine.
The decreasing prices can be attributed to lower raw material costs, particularly the significant decrease in lithium prices since the beginning of 2023. Moreover, the recent discovery of massive lithium deposits, including the McDermitt caldera on the Nevada-Oregon border, has the potential to meet global battery demand for decades. Geologists estimate that the McDermitt caldera may contain up to 120 million tonnes of lithium.
In conclusion, the recent drop in battery prices, specifically lithium-ion battery cells, is a significant development that is expected to supercharge the transition to electric vehicles. The achievement of reaching $100/kWh brings electric vehicles closer to price parity with fossil fuel-burning vehicles, making them more appealing to consumers and automakers. This price decrease also has implications for other technologies like solar and wind installations. The falling prices can be attributed to decreasing raw material costs, including the significant decrease in lithium prices and the discovery of massive lithium deposits in regions such as the McDermitt caldera.
Sources:
– Benchmark Mineral Intelligence
– Gerard Reid on LinkedIn