'Historic milestone': Battery pack prices fall under critical $100/kWh mark for first time

Update from BloombergNEF reveals battery pack prices have plummeted from $1,100 per kWh in 2010 to $137 per kWh in 2020, powered by soaring EV sales, cheaper materials, and manufacturing and tech innovation

Lithium-ion battery pack prices have for the first time dropped under the $100 per kWh threshold widely regarded to be the price point required where electric vehicles (EVs) will be able match the upfront cost of fossil fuel vehicles, according to BloombergNEF.

In an update published earlier this week, the influential clean energy analyst revealed the cost of battery packs for certain electric buses in China dipped below the critical price point last year, marking a major milestone for the booming EV sector.

BNEF’s 2020 Battery Price Survey, which tracks costs across passenger EVs, e-buses, commercial EVs, and stationary energy storage systems, highlights the dramatic decline in battery pack prices over the last decade that have been driven by surging EV sales, declines in manufacturing and materials costs, and innovations in battery pack design.

Average battery pack prices have fallen a huge 89 per cent in real terms over the last decade from $1,100 per kWh in 2010 to a record $137 per kWh recorded this year, according to the update.

And costs are set to continue their decline over the coming decade, BNEF predicts, with the update suggesting the market average will hit $101 per kWh by 2023. It is around this price point that experts believe automakers should be able to produce and sell mass market EVs at the same sticker price as fossil fuel vehicles in many markets.

EVs are already more cost-effective than gasoline vehicles in a growing number of circumstances based on the total cost of ownership for many drivers due to lower fuel costs, but the higher upfront costs of zero-emission vehicles have long been a barrier to their widespread adoption.

“It is a historic milestone to see pack prices of less than $100 per kWh reported,” said James Frith, BNEF’s head of energy storage research and lead author of the report. “Within just a few years we will see the average price in the industry pass this point. What is more, our analysis shows that even if prices for raw materials were to return to the highs seen in 2018, it would only delay average prices reaching $100 per kWh by two years – rather than completely derailing the industry.”

BNEF expects battery pack prices to fall to $58 per kWh by the end of the decade, but argues is not yet clear which pathway the industry will take to achieve on-going price reductions past 2023. One possible route could be the adoption of solid-state batteries, it said, noting that they can be manufactured at 40 per cent of the cost of lithium-ion batteries mainstream today.

EV sales are expected to boom over the coming decade, as charging infrastructure becomes more widespread and corporates and governments around the world introduce bans on new polluting fossil fuel vehicles in order to help meet their global climate goals. The UK is set to phase out all new sales of petrol and diesel cars by 2030, while scores of high profile businesses have now committed to switching their fleets to zero emission models.

Read more: businessgreen.com