Average global battery prices fell 6% between 2020 and 2021, but they could continue to rise in the future, according to Bloomberg New Energy Finance’s (BNEF) annual battery price survey.
The average Lithium-ion battery pack price is $132/kwh in 2021 — down from $140/kwh in 2020 — and $101/kwh on a cell basis, the report said.
However, higher raw material prices have pushed prices back, which, according to the report, predicts an average package price of $135/kwh for 2022. That means the moment prices fall below $100/kwh — often seen as a major milestone for electric vehicle affordability — was delayed by two years, BNEF said.
Battery production at the Mercedes-Benz plant in Hedelfingen, Germany
BNEF predicts the average package price will fall below $100/kwh by 2024, allowing automakers to produce electric cars at prices on par with petrol cars. Cost is still the biggest barrier a 2020 study found for EV adoption.
This is not the first report to raise raw material sourcing issues as a potential sign of higher battery prices. Other reports have separate nickel are in short supply — and not all batteries need it.
However, BNEF found that supply chain problems even pushed up the lower cost of raw materials for lithium iron phosphate (LFP) chemicals currently being used by some automakers and suppliers. China’s large battery is favored and gradually adopted by Tesla. Since September, China’s LFP cell manufacturers have increased prices by 10% to 20%, the report said.
Average battery and battery prices by volume by volume 2013-2021 (from BNEF report)
If these predictions come true, next year could break the chain of good news that has helped cut costs rapidly. BNEF reports price drop in Year 2020 and 2019 as well as the industry has made great strides in the past decade. The average package price was $1,200 per kWh in 2010, so the 2021 average represents an 89% drop in just over a decade, BNEF notes.
Battery price hike could push US Department of Energy’s $60 per kwh targets as a breakeven point for EVs compared to internal combustion.
Automakers have ambitious goals of their own, like Toyota’s Goals to cut electric vehicle costs in half in 10 years. So do all states and countries. If batteries become more expensive in a year or two, will it push the target back? As a new player in this complex EV adoption trend, that remains to be seen.
