Battery prices in China are falling rapidly with no end in sight. Analysts view the trend as a catalyst in the mass-level decarbonisation of road transport worldwide. According to a new Bloomberg report, the cost of LFP battery cells in China has fallen by 51 per cent to an average of $53/kWh since 2023.
China’s two largest EV battery makers are pledging to slash the cost of their batteries this year. Behind the pledge is a cost war – and new battery chemistries.
In China, LFP battery packs now cost $75/kWh, and at that level, companies can sell EVs at the same price as or even lower than combustion engine models. Nearly two-thirds of EVs in the country are already cheaper than their ICE counterparts. The decline in battery prices in China will eventually benefit consumers in the global markets as well.
Analysts have talked for years that EVs will become affordable and the new normal when battery prices fall to $100/kWh. In China, LFP battery packs now cost $75/kWh, and at that level, companies can sell EVs at the same price as or even lower than combustion engine models.
On the plus side, battery companies are improving battery technology and manufacturing processes, and these enhancements also somewhat contribute to falling prices. BloombergNEF (BNEF), which researches commodity markets and revolutionary technologies, estimates battery prices will remain low for at least several more years.
The Battery Energy Storage System (BESS) industry could benefit the most from plummeting battery prices. Turnkey deployments already cost 43% less compared to 2023. BNEF estimates a 61% increase in stationary storage installations globally this year, amounting to 155 GWh.