Prices of key battery metals — especially lithium — have fallen dramatically since January, due to significant growth in production capacity across all parts of the battery value chain, from raw materials and components to battery cells and packs. Demand expectations also played a role.
There are two main drivers. One is technological innovation. We're seeing multiple new battery products that have been launched that feature about 30% higher energy density and lower cost. The second driver is a continued downturn in battery metal prices. That includes lithium and cobalt, and nearly 60% of the cost of batteries is from metals.
Now, we are going back to a price drop and potentially a faster one. Goldman Sachs updated its battery price forecast and noted that prices are starting to come down again:
Prices vary by sector, with electric buses and commercial vehicles in China having the lowest prices at $100/kWh. Average pack prices for fully electric passenger vehicles were $128/kWh. Battery prices across sectors have converged in recent years, which is an indication of the industry’s maturation and growth.
According to BloombergNEF’s annual lithium-ion battery price survey, average pack prices fell to $139 per kilowatt hour this year, a 14% drop from $161/kWh in 2022. (1) This advertisement has not loaded yet, but your article continues below. This is the largest decline observed in our survey since 2018.
Battery prices are resuming a long-term trend of decline, following an unprecedented increase last year. According to BloombergNEF’s annual lithium-ion battery price survey, average pack prices fell to $139 per kilowatt hour this year, a 14% drop from $161/kWh in 2022. (1) This advertisement has not loaded yet, but your article continues below.