Falling battery prices drive EV sales
June 29, 2021 - Improvements in battery technology mean that electric vehicles (EVs) are reaching cost parity with fossil-fuel cars. Last year, lithium-ion battery prices were $137/kWh -- 64% lower than in 2015.
According to projections by research company BloombergNEF (BNEF), larger EVs will reach price parity with their fossil-fuel counterparts in the U.S. and Europe in 2022, with parity reached in most other segments and regions by the end of the decade.
In America, President Joe Biden wants to boost the transition to EVs, which stalled under his predecessor, Donald Trump. He’s also proposed spending $174 billion to support EV production and charging infrastructure -- the U.S. had 97,500 charging outlets at the end of 2020 compared with over 800,000 public outlets in China.
In the European Union, automakers face stiff fines if they don’t cut their vehicles’ average carbon emissions per kilometre by 50% from 2021 to 2030. On the other hand, Germany offers rebates of as much as €9,000 ($11,000) for a fully battery-powered car. At the same time, EV owners in Norway don’t pay 25% value-added tax or road taxes. In addition, the UK, Netherlands and Italy will ban fossil-fuelled cars from their capital cities by the end of the decade.
According to BNEF’s 2020 Battery Price Survey, average pack prices will be close to $100/kWh by 2023. However, new cathode chemistries -- such as lithium-nickel-manganese-cobalt oxide -- are driving prices down, says BNEF’s Daixin Li.
“The increasingly diversified chemistries used in the market result in a wide range of prices.” Lithium iron phosphate chemistry has resulted in the lowest reported cell prices of $80/kWh.