Global battery prices are expected to continue to drop, enabling electric vehicles to reach parity with internal combustion engines by 2024, according to a new report from research firm Bloomberg NEF.
The report, BNEF’s 2019 Battery Price Survey, forecasts that average battery prices will be close to $100 per kilowatt hour (kWh) by 2023, compared with a 2019 price of $156/kWh. The report noted that 2019 battery prices have fallen 87% since 2010 when they were $1,100/kWh.
BNEF attributes the recent cost declines to increasing order size, growth in battery electric vehicle sales and the continued penetration of high energy density cathodes. In the coming decade, continued battery cost declines will be achieved through reduced manufacturing capital expenditures, new pack designs and changing supply chains, the report said.
“Factory costs are falling thanks to improvements in manufacturing equipment and increased energy density at the cathode and cell level,” Logan Goldie-Scot, head of energy storage at BNEF, said in a statement. “The expansion of existing facilities also offers companies a lower-cost route to expand capacity,” he said.
In addition, as major automakers ramp up and refine their manufacturing processes, they are going to be able to simplify and standardize battery pack design across different electric vehicle models, BNEF said, adding that simplified designs are easier to manufacture and to adapt to a variety of vehicles. And as automakers procure battery cells from multiple suppliers, it is likely that manufacturers will increasingly standardize their designs to serve those markets. And changes in battery pack design should also allow for simpler thermal management systems, reducing the amount of housing required for each module, the authors said.
As battery prices continue to fall, electrification is becoming increasingly attractive to more sectors of the economy, such as commercial vehicles and delivery vans, leading to differentiation in battery cell specifications, BNEF said. For instance, manufacturers of commercial and high-end passenger vehicles could focus on battery cycle instead of lower prices while the wider market for passenger electric vehicles would remain focused on low prices made possible by lower cost batteries, the authors said.
In the second half of the next decade, energy density of battery cells and packs will become more critical, and new technologies such as silicon or lithium anodes, solid state cells and new cathode materials will likely play a greater role in further cost reductions, BNEF said.
Further out, BNEF predicts that prices will continue to fall as demand for batteries passes 2 terrawatt hours (TWh) in 2024. “The path to achieving $100/kWh by 2024 looks promising,” the authors said, “even if there will undoubtedly be hiccups along the way.”
At that point, with battery prices below $100/kWh, electric vehicles will start to reach price parity with fossil fueled cars, though there would be variations depending on the region and the vehicle segment, according to the report.
Beyond that point, there is much less certainty on how the industry will reduce prices further, from $100/kWh down to $61/kWh by 2030, BNEF said. The even lower price is not impossible, the authors said, but noted that there are “a variety of options and paths that can be taken.”