Electric car battery prices continue to fall. And this year, according to an analysis by BloombergNEF, it fell by 20%, to reach $115 per kilowatt hour. This information was obtained by studying 343 data points. And according to a Bloomberg article, the decline is due to excess production capacity, falling raw material prices and the use of cheaper lithium-iron-phosphate batteries. In the last seven years, we would never have observed such a significant drop in the average price of lithium-ion batteries.
Soon, “parity”?
As a reminder, the battery is one of the most expensive elements of an electric car. And thanks to the sharp drop observed in 2024, the prices of electric cars could fall to the level of the prices of their thermal equivalents sooner than expected (a situation which should encourage more people to switch to electric cars). According to the study cited by Bloomberg, the average price per kilowatt hour could drop to $100 in 2026, which would make it possible to achieve this “parity” between electric cars and cars with thermal engines.
It is also important to specify that this is the world average price. According to the report, in China, the electric car is already cheaper than its equivalent with a combustion engine. This would be due to excess production capacity which forces companies to reduce their profits to gain more market share.
Otherwise, Bloomberg also indicates that after falling below 100 dollars, the price of the kilowatt hour should drop to 69 dollars in 2030. But at the same time, the agency warns that overcapacity will not become the norm, on the long term. And it also indicates that prices depend on many factors, such as sales of electric cars. Geopolitical tensions and tariffs could also impact the market.
- According to a study by Bloomberg, prices of electric car batteries will drop by 20% in 2024
- This drop would be attributed to excess production capacity and falling prices for raw materials and components.
- Furthermore, if the decline continues, the price of an electric car could be the same as the price of its thermal equivalent in 2026
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