π Battery prices for electric cars continue to drop during 2024
Average battery prices decreased by 20 percent to $115 per kilowatt hour during 2024. Battery cells fell even more, by 30 percent to $78 per kilowatt hour. Electric car batteries for passenger cars fell below $100 per kilowatt hour for the first time.
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- Average battery prices decreased by 20 percent to $115 per kilowatt hour during 2024.
- Battery cells fell even more, by 30 percent to $78 per kilowatt hour.
- Electric car batteries for passenger cars fell below $100 per kilowatt hour for the first time.
Sharp price drop in batteries
BloombergNEF's annual lithium-ion battery survey shows that prices continue to drop significantly. Technical improvements, manufacturing overcapacity, low metal and component prices, and the transition to cheaper lithium iron phosphate batteries (LFP) contributed to the price drop, reports Bloomberg.
In China, home to manufacturers like CATL and BYD, prices for almost all battery products are below the global average. Electric cars have already reached price parity with fossil-fuel cars in China, where electric cars are now cheaper than fossil-fuel cars. This is reflected in sales - in November, fully electric cars and plug-in hybrids accounted for 52 percent of total passenger car sales in China.
Different prices for different segments
The survey, which includes 343 data points, shows large price variations between different segments. Plug-in hybrids have battery prices of $320 per kilowatt hour, while commercial vehicles outside China are at $190 per kilowatt hour. Stationary energy storage systems dropped sharply to $125 per kilowatt hour due to intense competition and larger system sizes.
Battery packs are getting larger, increasing by about 10 percent annually globally. A full-size pickup like the Chevy Silverado electric has a battery pack that costs around $20,000 according to BloombergNEF's calculations. This mirrors the development of fossil-fuel cars between 1985 and 2005, when efficiency improvements in engines were offset by the transition to larger and more powerful models.
Pricing varies
The Fiat 500e costs 12,000 euros more than its fossil-fuel counterpart, despite the battery cost being only about 3,000 euros according to BloombergNEF. Pricing is influenced by several factors such as market incentives, brand strategy, and how much of the development costs need to be covered by the sales price.
Wright's law explains the price drop
The battery price drop follows Wright's law, a model that shows how costs decrease as production increases. According to data from Bloomberg NEF, battery costs decreased by 18 percent for each doubling of total production between 2010 and 2020. This resulted in a total cost reduction of 85 percent during the period. The high production rate in China is now driving this development further through large production volumes.
The model, formulated by aircraft engineer Theodore Paul Wright in 1936, has proven to be one of the most accurate for predicting technical advances, according to MIT researchers who tested various models on 62 different technical products.
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