The two main drivers of mass electrification are battery energy density (related to range) and battery costs (related to affordability), and both have improved tremendously over the past 15 years.
According to the Department of Energyβs (DOEβs) Vehicle Technologies Office, the average cost of a light-duty electric vehicle’s lithium-ion battery pack decreased by 90% between 2008 and 2023 when using 2023 constant dollars to reflect purchasing power (adjustment for inflation).
Battery costs have dropped substantially over the last 15 years
A kilowatt-hour of usable EV battery capacity cost $139 in 2023, and using 2023 constant dollars, it was $1,415/kWh in 2008. That’s a huge drop in battery cost.
The report says that a kilowatt-hour of usable EV battery capacity costs about $139 in 2023, and using 2023 constant dollars, it was $1,415/kWh in 2008. The estimate was calculated for production at a scale of at least 100,000 battery packs per year.
The progress is very high and significantly outpaced inflation (the current dollars in the chart), although it was the most rapid in the first several years.
Estimated EV Lithium-Ion Battery Pack Cost, 2008-2023
Estimated EV Lithium-Ion Battery Pack Cost, 2008-2023 (source: energy.gov)
It’s said that three main elements allowed battery costs to be brought down: improvements in battery technologies and chemistries, improvements in manufacturing, and simply a higher production volume.
We can calculate that at $139/kWh of usable battery capacity, a brand new 100-kWh pack should cost $13,900. A more popular 80-kWh pack would be $11,120.
Considering a $35,000-$40,000 price tag for a car, it’s still a substantial part of the price, but let’s also recall that over 10 years ago, in a similar bracket, we would get only an EV with a 24-30-kWh battery and a few times shorter driving range.
The question is whether the battery cost will continue to decrease substantially in the coming years. There are still new technologies on the table and the scale might be increased. In the long term, recycling should come into play to reduce material costs.
