Arguably the biggest reason that everyday people don’t buy electric cars is their price. On average, electric vehicles cost several thousand dollars more than their gas-powered counterparts.
That could soon change, according to a report by BloombergNEF, an energy research firm. The report suggests that the average price of electric car batteries could drop to just $101 per kWh by 2023. Ultimately, that drop could help electric vehicles become much more competitive with gas-powered cars in terms of price.
Dropping at Last
In a traditional car, the engine is usually the most complex and expensive component. Electric cars don’t have an engine in the typical sense but do have a massive battery pack. For most electric vehicles, the battery pack accounts for about a quarter of its total price. That means the cost of the battery on the manufacturer’s end has a lot to do with the car’s final retail price.
Lowering the price of batteries is arguably the best way to move the industry forward and make electric cars more accessible. The $100 per kWh milestone has long been viewed as the point at which electric vehicles can become cost-competitive with gas-powered ones.
Back in 2010, lithium-ion battery packs cost more than $1,100 per kWh. Ten years later, that price has fallen by 89 percent, according to BloombergNEF. Lithium-ion battery prices in 2020 hover around the $137 per kWh range but are continuing to fall.
That being said, some parts of the world already have access to cheaper batteries. In some parts of China—where battery production is plentiful and cheap—prices as low as $100 per kWh have been reported.
BloombergNEF cites several reasons for the trend of decreasing battery costs. It claims that increasing order sizes and more interest in electric vehicles are the main factors. The introduction of new battery pack designs has helped push the price even lower.
The report reads, “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.”
That is, by all accounts, good news for the electric car industry. It is even better news for consumers who may want an electric car but are unable to afford one at their current price points.
More to Come
While the path to a $100 per kWh battery is clear, analysts believe that battery prices can drop even further in the years to come. BloombergNEF predicts that the market average could reach $58 per kWh by 2030. That sort of change would revolutionize the world of transportation, paving the way for things like electric aviation, trains, and heavy machinery.
Of course, getting there could happen in a few ways.
Experts believe that the most likely scenario involves the adoption of solid-state batteries. These are much cheaper to produce than lithium-ion packs when done at scale. Moreover, since solid-state batteries tend to be higher-energy, they would also be more effective in electric vehicles.
To make solid-state batteries a realistic component, however, the supply chain needs to be established. Look for companies to work towards that goal throughout the next decade.