Average lithium-ion battery pack prices have fallen by the most in seven years, a survey shows, which is likely to accelerate the process of achieving parity between electric vehicles and gasoline-powered vehicles.
The survey shows that the cost of battery packs fell by 20% to $115 per kilowatt-hour in 2024. The survey pointed out that overcapacity of battery production, falling metal and component prices, and the continued shift to cheaper lithium iron phosphate batteries have driven the cost reduction. The study analyzed 343 data points across a range of applications including electric vehicles, buses and commercial vehicles.
Faster-than-expected battery cost declines suggest that electric vehicle prices will fall to levels similar to those of internal combustion engine vehicles as soon as 2026, when the average price is expected to be less than $100/kWh, commonly known as the “parity point”. The report points out that the Chinese market has already achieved this goal, with the average price of pure electric vehicles falling below that of gasoline-powered vehicles.
“In 2024, China alone is expected to produce enough cells to meet 92% of global demand for electric vehicles and stationary storage,” the report said. “This puts downward pressure on battery prices. Smaller manufacturers are facing challenges from larger companies, and are under pressure to lower battery prices and cut profits to compete for market share.”
But an oversupply of electric vehicle batteries is unlikely to become the norm. Electric vehicle batteries are more dependent on car sales, which ties battery production and sales to the number of cars delivered. The report pointed out that battery manufacturers are unlikely to produce a surplus of electric vehicle batteries due to slowing global demand.
Based on price and sales data collected since 2010, battery pack prices are expected to fall below the $100/kWh mark in 2026 and reach $69/kWh in 2030. However, geopolitical and policy changes have added uncertainty to the future development prospects of electric vehicles, and in turn, to battery prices.
In Europe, governments in countries such as France and Germany have cut subsidies for electric vehicles earlier than expected. As a result, European countries have lobbied to relax short-term targets for automobile carbon dioxide emissions and long-term plans to phase out sales of internal combustion engine vehicles. At the same time, US President-elect Donald Trump has threatened to impose a 60% tariff on cars imported from China and a 10% to 20% tariff on cars imported from other countries. The report pointed out: “Coping with the changing tariff system will remain a key challenge for battery suppliers and customers.”