Battery prices are rising. Is this a problem for the development of electric mobility?

Since electric cars began to be produced in 2010, battery prices have been falling, and each passing year they became more affordable. But that trend seems to have changed and, for the first time in ten years, prices have risen. Could this put the popularisation of electric mobility at risk around the world?

Battery prices have been recorded in the so-called annual lithium-ion battery price survey, carried out by BloombergNEF. According to this study, the price per kWh recorded in 2010 was $1,000/kWh, and at the end of 2021 it was $141/kWh. This price reduction has made it possible to popularise this type of vehicle, adjusting the price in the market.

The industry’s goal is for the price of electric cars to match that of comparable combustion-engine vehicles. This should happen when batteries reach a price of $100/kWh. From that price onwards, and always aiming for prices to keep falling, electric vehicles will cost the same as those with combustion engines and will be more affordable.

But these batteries are made from materials that are very hard to source. Cobalt, nickel and lithium have kept their market prices under control, but not enough to keep prices low. In fact, the supply crisis has meant that the price of these materials is low, but above the levels recorded in other years.

The data reveal that there is a 7% increase in battery prices. Manufacturers’ profits, however, have fallen. That could mean that they have absorbed part of the cost of this component. Technology has also been important, with the emergence of lithium iron phosphate (LFP) batteries.

These do not use cobalt or nickel, which makes them more practical. In fact, BloombergNEF expects this type of battery to reach a 40% market share.

The report’s data

The survey was carried out among 200 companies that sell batteries for electric vehicles, across passenger vehicles, commercial vehicles, buses and other applications dedicated to stationary storage. Several important findings can be drawn from this information.

For example, it is determined that the lowest price applies to batteries for buses and commercial electric vehicles in China. In that country and for this type of battery, the price is $131/kWh. For passenger vehicles, the average price is $138/kWh. In the case of the United States and Europe, prices are 24% and 33% higher.

These prices suggest that the price of electric vehicles will not fall in the coming months. It is expected that from 2024, with the regulation of the supply chain and the incorporation of new battery technologies, prices will fall. The $100/kWh target will be reached in 2026, two years later than initially forecast.