Bloomberg’s Latest Forecast Predicts Rapidly Falling Battery Prices

White 2018 Nissan LEAF driving

JUN 21 2018 BY MARK KANE 51

According to the latest Bloomberg New Energy Finance’s forecast – New Energy Outlook 2018 – falling battery prices will significantly affect the energy market.

Tesla Solar Roof

It’s estimated that lithium-ion battery prices decreased by 80% between 2010 and now. That was a major force behind the progress in the electric vehicle market, but it will also pull solar and wind generation.

BNEF predicts that by 2050, 50% of electricity is to be generated by wind and solar. Batteries will be key to solve issues of variable power output from renewables and will open the way for broader adoption. Power will be more often produced closer to where there’s demand (like solar on the roofs of factories or homes).

The report predicts up to $548 billion will be invested in battery energy storage systems by 2050 – two thirds at the grid level and the rest by households and businesses.

“Wind and solar are set to surge to almost “50 by 50” – 50% of world generation by 2050 – on the back of precipitous reductions in cost, and the advent of cheaper and cheaper batteries that will enable electricity to be stored and discharged to meet shifts in demand and supply.  Coal shrinks to just 11% of global electricity generation by 2050.”

The electric vehicle market, ESS, solar and wind electricity generation markets all will expand in parallel thanks to more affordable batteries.

It’s also important to note that there is a fundamental synergy between plug-ins, ESS and renewable electricity. EVs needs to be powered from renewable electricity to unleash full environmental potential, renewables need energy storage and local consumption. For example, UPS London expanded its fleet of 65 electric delivery trucks to 170 without an expensive upgrade to the power supply grid, because of utilization of smart grid management and energy storage system. The battery gives flexibility that allows more solar or wind electricity into the mix.

Source: New Energy Outlook 2018, Green Car Congress

Categories: Battery Tech, ESS

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51 Comments on "Bloomberg’s Latest Forecast Predicts Rapidly Falling Battery Prices"

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Pushmi-Pullyu

“According to the latest Bloomberg New Energy Finance’s forecast – New Energy Outlook 2018 – falling battery prices will significantly affect the energy market.”

I wouldn’t even call that a “forecast”. More like an inescapable logical conclusion.

comment image

(source: Clean Technica.com)

Stan1

These trends aren’t remotely matched in the projection and there is no good reason to expect them to slow. The exact opposite is true. Barring some fantastic unknown long term cost barrier, there is every reason to expect the above per annum price declines to increase due to scale over the next decade.

Get Real

You mean like with the…GigaFactory?

Dimitrij

Large-scale production will reduce costs, but a Gigafactory doesn’t sit atop a bottomless lithium mine.

Will

Only a handful of companies even farm the lithium for us. At moment they are meeting demand but those existing companies are already planning to drastically scale their production up to meet expected demand in the coming years.

drpawansharma

Commodity prices are the absolute hard ceiling.

Timmy

Floor

Stan1
Commodity prices are only a long run floor. Generally, high commodity prices tend to bring more supply. There is just a lag. And as the technology evolves it is moving away the hardest to mine elements as a cost saving measure. There is no reason that the commodity price floor is even close to where Bloomberg is suggesting and the rational projection is growing cost declines due to increasing scale and further improvements in technology. We are nearing the point where renewables plus storage are cheaper than running costs of most of these older technologies and there is no reason to think it stops there. On the flip side, all of these other technologies are now facing decreasing economies of scale as they begin contracting. It’ll get more expensive to get coal to the power plant because the coal companies are buying less and less rail transit. This again has lag effects since you get gluts which temporarily depress prices but those gluts cut investment which results in these ongoing cost increases. I do not know the future, but Bloomberg is predicting hard floors that there is no reason to expect anytime soon.
Doggydogworld

“We are nearing the point where renewables plus storage are cheaper than running costs of most of these older technologies ”

Not really. Stationary storage adds 10-20 cents/kWh to generation cost of 3-6 cents.. Wholesale NGCC is 3-4 cents in the US. And that assumes storage is used optimally. It costs much more to install storage that’s only needed a couple times a week or seasonally.

Storage is better provided by huge EV fleets connected to smart chargers.

GuyMan

Not that I disagree, but sources?

Stan1

“Stationary storage adds 10-20 cents/kWh to generation cost of 3-6 cents..”

You are just making up numbers and the point was the direction anyhow. NextEra signed a solar-plus-storage hybrid contract with Tucson Electric Power for $45/MWh a year ago May. That is 4.5 cents for solar plus storage. Xcel received solar-plus-storage bids of $36/MWh and wind-plus-storage of $21/MWh at the beginning of this year. Yeah, wind plus storage contracts already in the 2.1 cent range. NV Energy just got a solar only contract for $24/MWh as well as stand alone battery contracts for roughly half of Xcel’s from January. While these aren’t representative of current market-wide prices, they are completely reflective of the direction.

Salem

The biggest part of the battery prices are raw materials, with many manufacturers being unable to even secure these materials, in part due to too low current production and thereby rising prices, the future prices will depend mainly on how much raw materials can be produced (Supply and demand), so I actually expect the prices to stagnate or even increase for the near future at least

ziv
Stan, it depends on where we are on the S-Curve. It is possible, though not probable, that we are at the flattening out part of the price curve and that price improvements will be smaller in the future. Or the inflection point could be in 2 years, or in 5. It is also really hard to define pack prices due to the proprietal nature of pricing info. Add in the boastingly opaque nature of Tesla claims on pack pricing and you have a bit of a jumble. But it would seem that Tesla has the best price per kWh and is nearing $100 per kWh while GM and the rest are around $165 per. If the improvements continue at somewhere close to the final 22%, Tesla will be approaching close to a hard limit due to the commodity price of the packs themselves in just 2 to 3 years while GM and the rest of the “pack” will arrive 2 years after that. Solid state packs may give the industry a shot in the arm in the 2021 to 2024 time frame, but pack prices will be below $5,000 by 2021 (for Tesla, more like $5,900 for the rest) for… Read more »
Stan1
Agree ziv, it completely depends where we are on the curve but it is massively less likely we are on the flattening part of the curve than the upslope. There is no reason at all to believe Tesla or anybody else is approaching a hard limit on cost reductions for decades. It is a fallacy to project a technology slowdown because we don’t know today what will come when our experience is that these previously unknown improvements tend to speed up with scale. This effect has already been occurring for these exact same products for the last two decades. The R&D investments in this field have continued to balloon. There is no good reason to expect that research to not bear fruit. There are likely technology improvements available for the entire supply chain for decades. We’ve been iterating internal combustion engine improvements for a century and we are still finding improvements. Yeah, this change has been slow to date. Most of these firms have been dropping anchors trying to delay this eventuality since it is so totally disruptive to their current businesses. My input here has nothing whatsoever to do with what I want though. We are nearing tipping points… Read more »
Ziv

I agree with just about everything you say. We are definitely going to see continuing improvements in pack prices for the next couple years. My only concern is that even with the Gigafactory, Tesla may see their pack price improvements begin to see single digit improvements sooner rather than later. I.e., around 2021-2023 Tesla pack prices might improve by just 7-10% per year.
One of your other points is a good one, as well. The international nature of the electrification of vehicles is going to mean that if you fall behind, you may pay a significant price for doing so. Right now Tesla, BAIC, Nissan, Renault, Hyundai, VW and GM are really leading the pack for BEVs while Yutong and BYD are building the most electric buses. But it really seems like the China, the US, Japan and Europe each have a couple of relatively strong front runners for cars. But Proterra and the other western electric bus companies are falling way short of the Chinese electric bus makers. Tesla just seems to be a couple years ahead of all the other BEV makers today, though. I hope they can keep that lead.

drpawansharma

It’s unbelievable that Tesla model S 85 batteries were 55K in 2012.

ziv

The GM equivalent pack in 2010 (if they could have fit 85 kWh into the Volt) would have been $85,000, not just $55k. So 2012 was a huge improvement over 2010. The EV1 gen 2 NiMH pack cost around $1325 per kWh in 2000, so the improvements in pack price really did start with the Volt, Tesla Roadster and Leaf.

Bill Howland

I just hope batteries turn out better than Strauss’ Lie in the 1950’s – saying “Electricity will be Too Cheap to Meter”!!!

David Murray

This is good news. But I actually believe batteries are cheap enough NOW to make EVs viable against gasoline cars. The trouble is, nobody except Tesla is trying to build and sell them in numbers that bring costs down for the vehicles.

Doggydogworld

You’ve still got a$10,000 fuel tank. Drive train savings aren’t enough to offset that, and it’s not even close at the low end.

TCO is getting close to parity, at least.

Pushmi-Pullyu

Hmmm… if Elon was right about Tesla’s cell costs dropping to <$100/kWh later this year, and if pack level costs are only 25% of cell costs, then a 60 kWh battery pack would come to $7500 (cost, not price) for Tesla. Certainly not cheap, but at least somewhat less than $10,000. However, you could certainly argue that the retail price should be close to $10k.

David Murray is certainly correct to say or suggest that a large part of the reason other auto makers can’t make much profit on selling EVs is because they have not scaled up production the way Tesla has.

Expect that to change circa 2020.

EVShopper

Then they are gouging their customers. At $9000 to go from 55kWh to 80kWh for the Model 3 that’s $360/kWh.

arne-nl

They have certainly been gouging their customers. Look at the billions upon billions in profit they make…

Bunny

Hopefully those break even $78,000
Model 3 ‘s get Tesla to at least something of a profit.

Unlike Tesla, most automakers are in business TO make a profit.

Doggydogworld

If Elon’s cost/schedule forecasts were accurate Model 3 base price would be 29k instead of 49k.

We’ll get to a $7500 fuel tank for compact cars in 4-5 years, but that’s still way too high for a segment with$20k average MSRP. That’s why EVs do best in the lux-performance niche.

David Murray

The battery doesn’t have to cost that much. Tesla claims they will have the price down to $100 per kilowatt-hour at the pack level soon. So, we’re talking about a battery pack that costs $6,000 for a long-range BEV. But you could probably get that down to around $4,000 for a car like the Leaf with 150 mile range, which should work for most people.

BillT

While battery cost reductions are certainly encouraging, for the US at least the most popular vehicles (CUVs and pickup trucks) have barn-like aerodynamics and will need 100kWh – 300kWh batteries to be viable. So, I think we need another order of magnitude price drop still. For pickup trucks in particular, the transition to BEVs will take a while because I don’t think the market will accept an aerodynamic vehicle. Ford tried in the 1990s, was punished and went back to the brodozer look. I am a sedan guy myself but I am part of a dying breed in the US.

LS

Perhaps. One thing I don’t see mentioned is that right now it’s easy to choose a truck because it will cost only marginally more to operate than an SUV. When affordable EV SUVs are out, that choice becomes much harder when you are faced with choosing between a more practical, quieter, much cheaper, and faster SUV or a gasoline truck.

Of course many will still choose the truck for macho purposes, but it will take a lot more dedication.

fasterthanonecanimagine

Yeah. Thought of that, too. Why not buy a Tesla Semi for private use instead of an S or X – provided cash is not a problem. Without a trailer, reach is fantastic, acceleration of 5 sec. from 0-60 mph just great, not to mention that no SUV would obstruct my view anymore 🙂

EVShopper

It just means Tesla makes more profit. Not that they are going to reduce vehicle prices.

Sustainable2020

Correct, all bevs, sans Tesla, are compliance vehicles in numbers and/or regions sold. A few years from now, a majority of all bevs on the roads in USA will be Teslas. 7 years from now the bev ratio will likely be 4 Teslas for every other non-telsa bev in USA.
No other bev builder is now or the next few years actually trying to increase production significantly except for Tesla.

Gibber

And Nissan….

Don Zenga

Why are they talking about 2050 when so much is going to change by 2020. Bloomberg mentioned that battery price was $209/KWh in the end of 2017, actually that’s false and the real price should be somewhere around $180 and by 2020, it should be just around $140 given the big surge in Chinese production and the gigafactory.

Pushmi-Pullyu

The claim is that by 2050, 50% of grid power generation will be from wind and solar power. That doesn’t have much to do with whether or not auto makers can make cost-competitive BEVs.

I certainly do agree that the transition to renewable sources of energy for the grid will be a slower process than replacing gasmobiles with BEVs. Cars wear out in ~14 years, on average. Power plants get replaced far less frequently.

Awakeinla

Peeps dropped their Nokia bricks like flies after a couple years seeing iPhone in action. The stagnation with autos now is the lack of innovation and how generic autos have become. Trucks or suv or die. And all now look alike for all intents. In cali tesla 3’s are common sightings. I’m buying one becasue I *want* not need one and my suv isn’t even a decade old.

Awakeinla

I did the math and the gas savings is 27k over 5 yrs for one suv. Two make it a grand bargain. I may even get solar and savor day I never have to gas station again

Tom

That right there is some extraordinarily bad math.

Gibber

Depends on his curent MPG. 15,000 miles per year @ 20mpg is 750 gallons @ $5.00 per = $3750 per year x 5 years = $18,750. (My buddy has a 90 mile roundtrip commute and was spending $600 a month for fuel in his Colorado before buying a LEAF in 2014)

Darth

Does he charge at work? 2014 Leaf only goes 84 miles typically. Does he hypermile?

Nix

20 MPG is actually pretty good for a full size SUV. I counted 43 different 2017 SUV’s with combined MPG between 11 and 17 MPG on the EPA’s MPG website. And only 7 gas-powered (non-hybrid/PHEV) SUV’s with 21 or more MPG.

At 15 MPG combined, using your math the number jumps to $5000/yr and $25000 for 5 years. Of course you have to subtract electricity costs, but yea, the math is pretty crazy when the MPG of the vehicle is poor and gas prices keep rising.

Mark.ca

Not sure what math he is using but about 3 years ago a was driving 20k miles/y in a 17mpg suv and spending close to $5k in gas (gas was around $4 back then). Now with pv and ev they can kiss my ass.

Brandon

The Bloomberg figure of $209 per kWh at the end of 2017 is correct and fact. Not sure why you’re saying otherwise.
However, that’s not saying that some batteries or some company’s had costs a little below that. They are probably taking an average, which is the proper way to figure it.

Stan1

It isn’t correct nor a fact. It is fluff. The only cost that matters for a tech revolution is the leading edge cost. The trailing edge cost and average cost are meaningless. All other producers can go out of business.

Brandon

I believe average is a good, accurate indicator of costs. Don’t forget that we’re talking battery packs costs here, not just the cells.
Quoting from this article:
https://www.bloomberg.com/news/articles/2018-03-22/electric-cars-may-be-cheaper-than-gas-guzzlers-in-seven-years
“Battery packs averaged about $208 a kilowatt hour in 2017, squeezing profit margins and representing some two fifths of the total costs of electric vehicle.”

Stan1

What you believe has no bearing here. If one firm captures the whole market because it has a significant cost advantage due to a technology shift, the impact is the same regardless. The only cost that matters is the leading edge cost. The only thing average cost tells you is whether the rest of the industry can make money.

Stan1

This is a ridiculously pessimistic prediction with no rational reason given for the incredible dropoff in cost reductions.

sola

Yep, very pessimistic

According to IPPC, by 2050, we should get ALL emissions cut by 80% below 1990 emissions to avoid catastrophic climate change (keep the temp increase below 2C).

Compared to this, a 50% electricity-only prediction means that our children will likely have to face catastrophic global warming effects: runaway temperature increases (possibly 6C+), month-long summer heat-waves, huge ocean-level increases, total collapse of crop-averages resulting in food shortages…etc.

We must do more!

I have already installed a 12kW solar array for all our electricity (heat pump incl) and in line for a Model 3. I will replace my Prius to an electric car by the end of 2019 the latest.

Most everyone should be able to do this much, especially since the solar array is a no-brainer financially nowadays in most parts of the developed world and the TCO of an EV is not more than an ICE, especially if you feed it from your own solar array (net metering or similar).

Mark W

If the price of batteries has decreased by 80% since 2010, why does a replacement battery for a 2011 Nissan Leaf gone oup to $8000 with no increased capacity?

David Cary

Price does not equal cost. Nissan acknowledged at the time that $6000 was a subsidized cost. I am not sure why the subsidy went away so quickly but maybe the number of really poorly degraded packs has declined and so has the bad PR.

2013, 55k miles, reasonable pack in NC. But down a bar.

I was just thinking recently that even at $6k I wouldn’t bite. But extra capacity I might. When the book value is only about $8k, it is impossible to imagine a $6k or $8k expenditure.

SJC

One way to lower prices is increase energy density.

Mister G

GO TESLA GO DESTROY DIRTY GAS GUZZLERS AND DIESELS LOL CONNECT THE DOTS ON CLEAN AIR WAKE UP FOLKS thanks co2.earth