Electric Car Prices may Equal Gas Cars by 2023
As electric vehicles (EVs) are making their push for a higher share of the automotive consumer market, the cost of batteries has so far kept prices higher, not allowing electric cars to directly compete against their gas counterparts. However, a report from BloombergNEF shows that battery prices have fallen under $100/kWh for the first time, pushing for a drop in electric vehicle prices that could soon match retail values of internal combustion cars.
The $100/kWh price was registered on e-bus batteries for the Chinese market. Although this was the lowest reported price, the volume-weighted average price did not strand too high either, setting at $105/kWh.
The recorded drop in price has been consistent, as the electric vehicle battery pack prices revolve around the $126/kWh mark for volume-weighted averages. However, when considering prices reported at cell-level, battery electric vehicle (BEV) prices were down to $100/kWh. Consequently, this show that 21% of the total price of a BEV is drawn by the battery pack.
BloombergNEF (BNEF) results on the 2020 Battery Price Survey is predicting an average battery pack price of $101/kWh by 2023 for all electric vehicle categories. This includes electric passenger vehicles, e-buses, commercial electric vehicles such as trucks, as well as stationary batteries.
The importance of $100/kWh batteries
It is obvious that as battery pack prices drop, electric vehicles will follow suit, becoming cheaper and more affordable for the public. However, the $100/kWh marks a turning point for the electric automotive industry. It is by this point that automakers should be able to break even between combustion and electric vehicles.
In other words, by 2023 automakers should be able to build and sell both combustion and electric vehicles at the same price and with the same margin, allowing for a more balanced market.
Why Electric Car prices are dropping
Lower prices on battery packs are definitely a good sign. The main reasons for which battery packs are being sold at lower prices per kWh have to do with newer manufacturing technologies, but rather with demand.
Thus, lithium nickel manganese cobalt oxide batteries and their cobalt aluminum oxide counterparts are cheaper to the obsolete Li-Ion relatives. Lithium iron phosphate (LFP) batteries are expected to pull prices even lower, down to $80/kWh.
On the other hand, the constant increase of demand for battery packs also helps prices to keep on going on their descending slope.
Long-term expectations
If the $101/kWh by 2023 looks certain, even though some ups and downs may arise on the way, estimates show that by 2030 battery packs should reach a historical $58/kWh minimum. Compared to 2013, that is an 11.5-fold drop in price.
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