New analysis reveals major change in the cost of EV batteries: ‘Prices have been on a roller coaster over the past two years’

New analysis about battery prices for electric vehicles may have even more consumers ready to jump on the EV bandwagon, and that’s not a bad thing.

Making the transition to the eco-friendly vehicles has only been getting easier, and the latest analysis by BloombergNEF (BNEF) found that the cost of lithium-ion battery packs “dropped 14% to a record low of $139 per kilowatt-hour.”

This comes after there were “unprecedented price increases” for batteries in 2022, causing some consternation as EV costs temporarily rose as well.

“Battery prices have been on a roller coaster over the past two years,” BNEF head of energy storage Yayoi Sekine said, adding that local manufacturing efforts and regulations on key materials are some factors responsible for the ride.

Most lithium-ion batteries are made in Asia, with European- and United States-built products being more expensive because of “higher energy, equipment, land and labor costs,” as BNEF pointed out.

Production targets were reportedly a driving factor in falling prices, as the demand was lower than expected even as the ability to produce the batteries increased.

“It is another year where battery prices closely followed raw material prices. In the many years that we’ve been doing this survey, falling prices have been driven by scale learnings and technological innovation, but that dynamic has changed,” said BNEF energy storage senior associate Evelina Stoikou, the lead author of the analysis.

The report expects the average price of battery packs to reach new lows in 2024, citing technological innovation as one element to consider.

Lithium, nickel, and cobalt are all used in traditional EV batteries. However, the process of extracting the minerals is expensive and can lead to land degradation, which diminishes the capacity of soil to absorb planet-warming carbon, according to the United Nations.

Some scientists have been experimenting with sodium and zinc batteries as ways to mitigate this issue, while others have focused on expanding the lifespan of lithium batteries.

Regardless of which solution — or combination of solutions — comes out on top, the result could still be more affordable EVs.

“The more important element is that it allows carmakers to reduce the price of EVs further and makes it easier for carmakers to sell budget EVs with a profit, which has been basically impossible so far,” one person wrote on Reddit.

“If cheaper components make it more profitable to service that end of the market, then that’s a win for everybody,” another Redditor said.

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