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In an historic turn of events, global lithium-ion battery pack prices have taken a 20% plunge, coming to rest at approximately US$115 per kilowatt-hour (kWh) this year. This price drop takes EV (Electric Vehicle) battery prices below the US$100 mark, as reported by BloombergNEF.
This significant fall of 20%, the largest yearly drop since 2017, was revealed in the acclaimed Lithium-Ion Battery Price Survey by BloombergNEF, Bloomberg’s clean energy research division. Interestingly, the preceding year experienced a drop of 14%. These figures constitute the sum of the cell and pack prices, standing at US$78 and US$37 respectively. The organization predicts yet another drop of approximately US$3 by 2025.
The noteworthy descent can be attributed to an array of reasons including cell manufacturing surplus, economies of scale, drop in metal and component prices, lull in EV market growth, and a surge in the use of comparatively less expensive lithium iron phosphate (LFP) batteries over nickel manganese cobalt (NMC) ones.
The drop in prices, substantially universal across all applications, was particularly impactful for battery electric vehicles (BEVs), resulting in a price reduction to under US$97 per kWh, a first-time fall below the US$100 threshold. It means EVs are now cost-competitive with internal combustion engine (ICE) vehicles, at least in China, and this trend is predicted to gain traction globally.
Battery energy storage systems (BESS) mirror this downward trend with a 19% fall to US$125 per kWh. Instigators for this include intense market competition, surplus, enhanced adoption of LFP batteries, and a transition towards larger cell and system dimensions, particularly in China.
This overall surplus is highlighted by the fact that the existing battery manufacturing capacity is more than double the demand for lithium-ion batteries this year.
On a regional classification, China offers the lowest average battery pack prices at $94/kWh. In contrast, averages in the US and Europe were marked up by 31% and 48% respectively, and this disparity continues to grow due to the highly competitive market in China.
Evelina Stoikou, the head of BNEF’s battery technology team and lead author of the report said, “The price drop for battery cells this year was greater compared with that seen in battery metal prices, indicating that margins for battery manufacturers are being squeezed. Smaller manufacturers face particular pressure to lower cell prices to fight for market share.”
While these figures spread across the entire year, the latter part may be witnessing an even steeper drop. “BESS system-level costs in China have fallen to just US$82 per kWh in Q3,” said Iola Hughes, head of research for Rho Motion. This firm, recently acquired by lithium-ion battery materials supply chain analysts Benchmark Mineral Intelligence, reported some of the lowest cell prices resting at US$40/45 per kWh, even though the typical average hovers around US$55.
As battery prices continue to decrease, ACE Battery offers a range of advanced solutions including lithium-ion batteries for energy storage, floor cleaning machines, aerial work platforms, and more. Our NMC, LiFePO4, and prismatic cells ensure reliable power for various industries.
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