Economies of scale and low material costs could see the average price of lithium-ion cells fall below $100/kWh in the next three years and reach $73/kWh by 2030, according to a new analysis by IHS Markit.
As the average cost of lithium-ion batteries continues to fall, further reductions will increase the competitiveness and wider adoption in electric transportation and grid storage applications, say the industry analysts.
If lithium-ion reaches the forecast cost by 2023, it will be the equivalent of an 86% decline— or by $580/kWh— in a decade, according to IHS.
The biggest contributor to falling battery cell costs will be reductions in manufacturing costs through larger factory sizes and improving economies of scale, say IHS.
Reductions in material costs by improving efficiencies and adopting lower cost cathode compositions, and improvements in battery energy density are also expected to play a role.
While lithium iron phosphate (LFP) has already fallen below the $100/kWh threshold in 2020, it is expected the other big chemistries nickel manganese cobalt (NMC) and nickel cobalt aluminium (NCA) will follow suit soon.
All three types are expected to be below the $100 mark by 2024.
LFP will remain the lowest cost option throughout the next ten years, say IHS, with NMC and NCA continuing to command a majority share of the automotive and transport sector on account of their higher energy density.
Youmin Rong, senior analyst, clean energy technology, IHS Markit, said: “Cost is the name of the game. Technology advances and competition between the different types of lithium-ion batteries is driving prices down.
“Ultimately, the two major growth markets— transportation and electric grid storage— depend upon lower costs to make batteries more competitive with the internal combustion engine and fossil fuel power generation.”