Battery market
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For the first time, battery pack prices of less than $100/kWh have been reported. It comes as new research reveals lithium-ion battery pack prices have this year fallen 89% in real terms.

The research from BloombergNEF reveals that while they were above $1100 per kilowatt-hour in 2010, they have in 2020 fallen to $137/kWh. And by 2023, BloombergNEF forecasts average prices will be close to $100/kWh.

The breakthrough price of less than $100/kWh came in China and was for batteries in e-buses. While these were the lowest reported prices, the volume-weighted average price for e-buses in China was slightly higher, $105/kWh.

BNEF’s 2020 Battery Price Survey considers passenger EVs, e-buses, commercial EVs and stationary storage and predicts that by 2023 average pack prices will be $101/kWh.

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The study highlights that it is at around this price point that automakers should be able to produce and sell mass market EVs at the same price – and with the same margin – as comparable internal combustion vehicles in some markets.

This is on the assumption that no subsidies are available, but actual pricing strategies will vary by automaker and geography.

James Frith, BNEF’s head of energy storage research and lead author of the report, said it was “a historic milestone to see pack prices of less than $100/kWh reported”.

“Within just a few years we will see the average price in the industry pass this point. What’s more, our analysis shows that even if prices for raw materials were to return to the highs seen in 2018, it would only delay average prices reaching $100/kWh by two years – rather than completely derailing the industry.”

He added that the industry is “becoming increasingly resilient to changing raw material prices, with leading battery manufacturers moving up the value chain and investing in cathode production or even mines”.

He explained leading battery manufacturers are now enjoying gross margins of up to 20% and their plants are operating at utilization rates over 85%.

Maintaining high utilization rates is key to reducing cell and pack prices, stresses BNEF, and if utilization rates are low, then equipment and building depreciation costs are spread over fewer kilowatt-hours of manufactured cells.

Daixin Li, a senior energy storage associate at BNEF, added: “The increasingly diversified chemistries used in the market result in a wide range of prices. Battery manufacturers are racing to mass-produce higher energy-density batteries with some new chemistries such as lithium nickel manganese cobalt oxide and lithium nickel manganese cobalt aluminum oxide set to be mass-produced as early as 2021.

“Lithium iron phosphate, however, plays as a cost-competitive alternative, contributing to the lowest reported cell prices of $80/kWh.”

BNEF says the path to achieving $101/kWh by 2023 “looks clear, even if there will undoubtedly be hiccups, such as commodity price increases, along the way”.

But it adds that there is much less certainty on how the industry will reduce prices even further from $100/kWh down to our expectation of $58/kWh by 2030. This is not because it is impossible, but rather that there are several options and paths that could be taken.

One possible route to achieving these lower prices is the adoption of solid-state batteries. BloombergNEF expects that these cells could be manufactured at 40% of the cost of current lithium-ion batteries, when produced at scale.

These reductions would come from savings in the bill of materials and in the cost of production, equipment, and the adoption of new high-energy-density cathodes. In order to realize these reduced prices, the supply chain for key materials, such as solid electrolytes, not used in lithium-ion batteries today, needs to be established.