A rapid fall in lithium-ion battery prices
Lithium-ion battery prices saw a dramatic decrease in 2024, reaching $115/kWh, a 20% drop from the previous year. According to a BloombergNEF report, this trend could bring electric vehicles (EVs) closer to price parity with gasoline cars as soon as 2026, when average costs are expected to fall below $100/kWh.
The factors behind this historic decline
Several elements explain this fall:
- Reduced component prices.
- Overproduction of cells.
- Adoption of new chemistries, such as lithium-iron-phosphate (LFP).
China, which is expected to produce 92% of global battery demand in 2024, is putting significant pressure on prices. Small manufacturers struggle to compete with giants who lower their margins to gain market share.
The impact of US battery policies
The Inflation Reduction Act (IRA) played a crucial role in massively subsidizing battery manufacturing costs through the Advanced Production Tax Credit (Section 45X). However, the future of this law is uncertain. President-elect Donald Trump may consider dismantling it, including the $7,500 consumer credit (Section 30D).
Despite this, it would be unlikely that Trump would renounce the IRA entirely. These incentives have created thousands of good-paying jobs and made North America the fastest-growing region for battery manufacturing. Removing these advantages would risk slowing the growth of EVs while strengthening China’s dominance in this strategic sector.
Towards an electric revolution in 2026
If this trajectory continues, the automotive industry could enter a new era where electric vehicles become as affordable as thermal cars. This shift would mark a major step forward in the global energy transition, while strengthening the competitiveness of North American players in the battery market.
With information from Inside Ev’s
The text Towards price parity for gasoline and electric vehicles in 2026 comes from L’annuel de l’automobile – Automotive news
Swiss
