Lithium-ion batteries costing under $100/kWh hit the market for the first time this year with industry analysts predicting the average price of the technology will be around the much vaunted milestone by 2023.
Battery pack prices of less than $100/kWh were reported for e-bus applications in China, with the volume-weighted average price for e-buses in the country sitting at $105/kWh, according to research company BloombergNEF (BNEF).
The average prices of $100/kWh at the cell level indicates that on average the battery pack portion of the total price accounts for 21%, say BNEF.
BNEF’s 2020 Battery Price Survey predicts that by 2023 average pack prices will be $101/kWh for passenger EVs, e-buses, commercial EVs and stationary storage.
At this price point EV OEMs should be able to produce and sell mass market cars at the same price as internal combustion vehicles in some markets, say BNEF— assuming no subsidies are available.
James Frith, BNEF’s head of energy storage research and lead author of the report, said: “It is a historic milestone to see pack prices of less than $100/kWh reported. Within just a few years we will see the average price in the industry pass this point.
“What’s more, 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. The industry is becoming increasingly resilient to changing raw material prices, with leading battery manufacturers moving up the value chain and investing in cathode production or even mines.”
The fall in lithium-ion pack costs to an average $137/kWh this year represents an 89% decline in real terms from 2010 when pack prices were above $1,100/kWh.
BNEF says the cost reductions were due to increasing order sizes, growth in BEV sales and the introduction of new pack designs.
The analysts believe new cathode chemistries and falling manufacturing costs will further drive prices down, with leading battery manufacturers enjoying gross margins of up to 20% and their plants operating at utilisation rates more than 85%.
Daixin Li, a senior energy storage associate at BNEF, added: “Battery manufacturers are racing to mass-produce higher energy-density batteries with some new chemistries such as lithium nickel manganese cobalt oxide – NMC (9.5.5) – and lithium nickel manganese cobalt aluminum oxide – NMCA – set to be mass-produced as early as 2021. Lithium iron phosphate – LFP – however plays as a cost-competitive alternative, contributing to the lowest reported cell prices of $80/kWh.”
The path to achieving $101/kWh by 2023 looks clear, even if there will undoubtedly be hiccups, such as commodity price increases, along the way.
BNEF is less certain on how the industry will reduce prices even further to its expected $58/kWh by 2030.
One possible route to achieving these lower prices is the adoption of solid-state batteries. BNEF expects these cells could be manufactured at 40% of the cost of current lithium-ion batteries, when produced at scale.
These reductions would come from savings in the bill of materials and in the cost of production, equipment, and the adoption of new high-energy density cathodes.
In order to realize these reduced prices, the supply chain for key materials, such as solid electrolytes, not used in lithium-ion batteries today, needs to be established.