The Declining Price of EV Battery Packs

The Declining Price of EV Battery Packs

Good news for the price of elec­tric vehi­cle (EV) bat­ter­ies! New find­ings by the Depart­ment of Energy’s (DOE) Vehi­cle Tech­nolo­gies Office esti­mates the cost of an elec­tric lithi­um-ion bat­tery pack declined 87% between 2008 and 2021 (using 2021 con­stant dol­lars). Lithi­um-ion bat­tery packs are the pow­er source for most EVs. The 2021 esti­mat­ed price of a lithi­um-ion bat­tery pack is $157/kWh on a usable ener­gy basis for pro­duc­tion at scale (100,000 units per year). In com­par­i­son, the price was $1,237/kWh on a usable ener­gy basis in 2008! This reduc­tion in bat­tery pack price approach­es the $100 thresh­old at which the cost should match a car with an inter­nal com­bus­tion engine. The cost decline is due to improve­ments in bat­tery tech­nol­o­gy and chem­istry and an increase in man­u­fac­tur­ing volume. 

While these gains over the past decade are impres­sive, price reduc­tions are expect­ed to slow as sup­ply scram­bles to meet the grow­ing demand. Tem­po­rary short­ages could affect the short-term price for the crit­i­cal bat­tery ingre­di­ent — lithi­um as com­pa­nies scale up pro­duc­tion. How­ev­er, lithi­um is abun­dant, with an esti­mat­ed 21 mil­lion tons in reserve world­wide. Fur­ther price impacts could occur with sup­ply issues with oth­er com­po­nents such as cobalt and nickel. 

Despite these poten­tial set­backs, the price of lithi­um-ion bat­tery packs is expect­ed to plum­met to $92 kWh by 2024, accord­ing to Bloomberg NEF. Tech­no­log­i­cal gains will also aid in low­er­ing the cost. For exam­ple, lab­o­ra­to­ries are exper­i­ment­ing with low-cobalt and or cobalt-free bat­ter­ies, and com­pa­nies across the globe have plans to build new elec­tric vehi­cle bat­tery factories. 

It is impor­tant to note that fed­er­al reg­u­la­tions dic­tate an EV’s bat­tery pack be cov­ered for at least 8‑years or 100,000 miles. Be sure to check with your vehi­cle man­u­fac­tur­er as war­ranties can dif­fer. Some man­u­fac­tur­ers offer replace­ments if the bat­tery life drops below a cer­tain per­cent­age, like 75% for the Nis­san Leaf. Tes­la pro­vides an extend­ed war­ran­ty of 8‑years or 150,000 miles for its new Mod­el S and X and a 70% bat­tery life replace­ment thresh­old. How­ev­er, EV bat­ter­ies can last approx­i­mate­ly 10 years or longer under nor­mal dri­ving con­di­tions before need­ing replace­ment, longer than most peo­ple keep a new car. This means the major­i­ty of dri­vers will not have to pay for a replace­ment bat­tery out of pocket. 

Sources 

https://www.nature.com/articles/d41586-021–02222‑1 

https://www.nytimes.com/2021/02/16/business/energy-environment/electric-car-batteries-investment.html 

https://www.energy.gov/eere/vehicles/articles/fotw-1206-oct‑4–2021-doe-estimates-electric-vehicle-battery-pack-costs-2021 

https://afdc.energy.gov/vehicles/electric_batteries.html 

https://www.bloomberg.com/news/articles/2021–09-16/why-an-electric-car-battery-is-so-expensive-for-now-quicktake 

https://pubs.usgs.gov/periodicals/mcs2021/mcs2021-lithium.pdf 

https://www.tesla.com/support/vehicle-warranty 

https://usa.nissannews.com/en-US/releases/release-bc5df8c40e6e686b4db9c27c7b039811-nissan-announces-us-pricing-for-2020-leaf-offering-nissan-safety-shield-360-standard-and-a-new-ev-sound#:~:text=The%20limited%20Nissan%20LEAF%20lithium,a%20period%20of%208%20years%20%2F 

https://www.truecar.com/blog/how-long-do-electric-car-batteries-last/