In a groundbreaking development, CATL, the world's leading battery manufacturer, has announced plans to slash battery costs by 50% from $110 per kWh in mid-2023 to $56 per kWh by mid-2024. A move expected to be followed by BYD, and other major battery manufacturers.
Lithium Ion Battery Manufacturers New Price War
This significant reduction in prices has caught many by surprise, especially considering that esteemed forecasters like BNEF and RMI had projected (as recently as Q4 of 2023) this price point to be achieved by 2030.
The implications of these lower battery costs are poised to revolutionize the electric vehicle (EV) market, particularly in terms of pricing dynamics.
Impact of Battery Cell Price Declines on EV Pricing
Historically, battery packs have constituted the most expensive component of an EV. However, with the continuous decline in lithium battery prices, their share of an EV's total cost has been steadily decreasing. In 2023, for instance, the price of a battery pack accounted for approximately 30% of an EV's total cost, a notable decrease from the 49% recorded in 2016.
Following CATL's price cuts, a 60-Kilowatt Battery Pack will now cost manufacturers less than $4,000. This achievement not only signifies a remarkable advancement but also accelerates the timeline for reaching cost milestones in the EV industry.
With the price decreases, batteries will comprise close to 20% of a vehicle's manufacturing cost, a level initially not expected until 2030. This shows how the electric vehicle landscape is evolving at an unprecedented and unpredictable pace.
Price Decreases Start With EVs, Followed By Battery Energy Storage Systems
The downward trajectory of lithium battery costs promises to make electric vehicles more accessible to a broader consumer base. As the industry continues to innovate and economies of scale come into play, the prospect of affordable, high-performance electric vehicles becomes increasingly tangible. Additionally, the significant cost decrease will also further reduce prices for Battery Energy Storage Systems. (Deciding When to Invest in BESS).
