Tesla Gigafactory

Tesla Gigafactory

The latest battery report “Crossing the Line: Li-ion Battery Cost Reduction and Its Effect on Vehicles and Stationary Storage,” released by Lux Research, indicates upcoming cost reductions for lithium-ion battery packs.

They expect that in 10 years from now, costs will fall to just $172/kWh.

But not all manufacturers will benefit from such low prices, according to the Lux Research's new model. Nissan-AESC, BYD and General Motors-LG Chem still will be above $200/kWh. Only Panasonic-Tesla breaks into $200 to $172/kWh in the forecast.

"The electric vehicle opportunity is set to expand, as leading battery developers like Panasonic drive down prices of lithium-ion (Li-ion) battery packs by 35% to $172/kWh in 2025, according to Lux Research. However, only the best-in-class players will achieve that cost threshold, while others lag at $229/kWh.

The estimate is based on a new bottom-up cost model built by Lux Research in an industry known for being highly secretive about its costs. The model accounts for differences in battery chemistry, form factor, production scale, location and other nuances."

Here are a few key findings provided by Lux Research:

  • Competitive gap is widening. Technological innovation and scale are helping leaders like Panasonic, in partnership with Tesla, widen their competitive advantage. While Panasonic-Tesla and China’s BYD will achieve $172/kWh and $211/kWh at the pack levels, respectively, the Nissan-AESC partnership risks falling behind at $261/kWh unless it changes technologies and production strategies.
  • Disruptive Li-rich NMC will deliver more gains. In 2025, a disruptive Li-rich NMC would bring in cost gains of $17/kWh over conventional NMC/graphite cells. While scale-up efficiencies like Tesla's “Gigafactory” remain a key strategy, geographical location and technology like high-voltage cathodes are also key factors.
  • Some benefits will reach stationary storage market, too. Li-ion cost reduction will positively impact the stationary storage market as well. However, it will not address added costs like the power conditioning system, land, construction and integration. Therefore, installed stationary systems spanning from residential to grid-scale will range from $655/kWh to $498/kWh in 2025, respectively.

Cosmin Laslau, Lux Research Senior Analyst and lead author of the report said:

“High battery prices have led to some huge missed opportunities in the electric vehicle market. Now if developers can drive down prices to $200/kWh or less at the pack level, they have a chance of selling millions of EVs by the mid- to late-2020s, and reap great revenues.”