BloombergNEF--Battery prices experienced their biggest drop since 2017, falling 20% from 2023 to a record low of $115 per kilowatt-hour, according to BloombergNEF (BNEF). This decline is driven by factors such as overcapacity in cell manufacturing, economies of scale, lower metal and component prices, a shift toward cheaper lithium-iron-phosphate (LFP) batteries, and slower electric vehicle (EV) sales growth. The figure represents a global average, with significant price variations across regions and applications.
In the last two years, battery manufacturers ramped up production in anticipation of growing demand for EVs and stationary storage. However, overcapacity now exists, with global battery-cell manufacturing capacity exceeding demand by over 2.5 times. The EV market, while still the largest demand driver, has seen slower growth compared to previous years, while stationary storage markets are expanding rapidly, especially in China.
Evelina Stoikou from BNEF noted that the larger price drop for battery cells compared to battery metals suggests manufacturers' margins are under pressure, especially smaller players trying to maintain market share.
Battery prices for electric vehicles (BEVs) have now fallen below $100 per kilowatt-hour for the first time, with prices in China averaging $94/kWh, significantly lower than in the US and Europe. This price gap is attributed to lower production costs and higher competition in China, while higher costs in the US and Europe reflect less mature markets and lower volumes.
Despite low raw material prices, geopolitical tensions and tariffs could drive prices up in the future. BNEF expects further price decreases in the coming years, with next-generation technologies and continued manufacturing improvements helping to reduce costs further.
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