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Falling Battery Costs To Help EV Prices Match ICE Vehicles in 2023

Electric vehicles (EVs) are set to erase the current price advantage of conventional cars when battery pack prices drop to $100 per kilowatt-hour in 2023, BNEF’s new 2020 Battery Price Survey showed on Wednesday. 

Average battery prices below $100/kWh are widely considered as the tipping point for mass EV adoption. 

Lithium-ion battery pack prices have declined by 87 percent from 2010 to 2019, with the volume-weighted average hitting US$156/kWh last year, according to estimates from BNEF.

 “By 2024, battery pack prices go below $100/kWh on a volume-weighted average basis, driven in part by the introduction of new cell chemistries and manufacturing equipment and techniques,” BNEF said in its Electric Vehicle Outlook 2020 earlier this year.

In its 2020 Battery Price Survey, BNEF now sees battery pack prices reaching the $100/kWh milestone in 2023, while the current battery price is at an average $126/kWh.

“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/kWh by two years -- rather than completely derailing the industry,” James Frith, lead author of the report and BNEF’s head of energy storage research, says.

By 2030, the price of battery packs will more than halve compared to current prices and are set to average $58/kWh, BNEF predicts in its new report. This drop in prices could also be supported by mass production of solid-state batteries, which BNEF sees costing 40 percent of the cost to make lithium-ion batteries.  

BNEF’s projection for the $100/kWh milestone is largely in line with other forecasts.

Wood Mackenzie sees battery pack prices dropping below the US$100/kWh milestone by 2024, thanks to economies of scale and technological improvements, and despite the coronavirus-driven crisis.

IHS Markit sees the average cost of a Li-ion battery cell dropping below the US$100 kWh milestone in 2023. In 2030, the average cost of such a cell is set to further drop to $73/kWh, according to IHS Markit’s analysis.

By Charles Kennedy for Oilprice.com

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