The cost of electric vehicle (EV) batteries is plummeting, marking the steepest decline since 2017, as new technologies and cost-efficient alternatives revolutionize the industry. In 2024, the price of EV battery packs dropped by 20%, a dramatic shift that brings electric vehicles closer to price parity with their gasoline-powered counterparts.
According to BloombergNEF’s annual battery price survey, the cost of battery packs has fallen to $115 per kilowatt-hour (kWh), driven by increased cell production, lower material prices, and the growing adoption of cheaper lithium iron phosphate (LFP) batteries.
This significant price drop is expected to continue over the next few years. By 2026, battery prices are predicted to fall below $100 per kWh, a critical threshold that would make EVs more affordable than comparable internal combustion engine (ICE) vehicles. By 2030, battery prices could drop as low as $69 per kWh, further fueling the adoption of electric vehicles worldwide.
However, geopolitical factors could influence these trends. As highlighted in the report, China continues to dominate the global battery market, producing enough battery cells to meet 92% of global demand in 2024. This has exerted downward pressure on prices. At the same time, the rapid price reductions are causing a fierce price war among major manufacturers like BYD and CATL, creating significant pressure on smaller producers to cut prices while sacrificing margins. While this price war is helping drive down EV costs, it could lead to overcapacity in the market, forcing some manufacturers to reduce output if electric vehicle sales slow.
Policy changes in key markets could also have a significant impact on battery prices. In Europe, both Germany and France have reduced their EV subsidies, while in the U.S., there are concerns that the incoming administration may end the $7,500 federal EV tax credit and impose heavy tariffs on imports, particularly from China. As the report concludes, navigating these shifting policy landscapes will be a key challenge for both battery suppliers and consumers in the coming years.
