Declining Battery Prices Boost Electric Car Market
Lithium-ion battery prices are without a doubt falling. At what level prices are now and where they are heading is always difficult to determine.
A recent article published by Responding to Climate Change includes an interesting graph with battery prices stated by different sources, which gives us a better outlook of the situation.
Levels of over $1,000/kWh 10-years ago seems extremely high in 2015 as most sources are saying that the industry is now somewhere between $250 to $450.
Even today we saw Tesla introduce a new base Model S (70D – details) with an additional 10 kWh of battery power (and another motor) for just $4,000 more, reflecting now only lower cost of production of the car itself, but also a declining raw battery cost. Clearly the days of $500+ per kWh are long gone in the automotive field.
Red bottom line at $150/kWh is still 10 years from now, according to forecasts.
Anyways, lower costs of the most expensive part in electric cars will translate to a reduced price for whole cars and that will trigger higher sales.
At lower prices there will be new opportunity to increase battery capacity and range, which will expand the market too. The larger the market, more R&D spending will be directed to improve technology.
“We reviewed more than 80 different sources and found that in 2007, cost estimates for lithium-ion batteries for EV manufacturers were above US$1000 per kWh.
Seven years later, the battery cost for leading electric car models was around US$300 per kWh. This is particularly impressive, given that production and sales of EVs have only really started to pick up in the last couple of years.
If prices keep falling at this rate, we could be on course to reach US$150 per kWh – the price point around which some people believe EVs can become directly competitive with petrol-driven cars – in the next decade.”