‘Cheaper Than Fixing An Engine’

• Climate research firms expect the prices of lithium, a key raw material in an EV battery, to plummet in the coming years.
• This trend will likely keep second-life batteries in service years after they are first introduced, thanks to technological improvements.
• Battery replacements are rare. Even then, replacements are poised to cost as much as, or even lower than replacing a combustion engine by 2030. 

The high-voltage battery is the lifeblood of an electric vehicle. However, concerns about the long-term health of an EV battery and the potential high cost of replacing it, especially on a used model, may deter many buyers from going electric. However, a silent revolution is underway in the world of battery manufacturing. That revolution is focused on increasing the energy density of batteries and improving their durability, all of which is poised to impact their replacement costs and second-life values, as per a new report from battery health and data start-up Recurrent.

Battery replacements are rare. Automakers generally offer a warranty of eight years or 100,000 miles on the pack. Most modern batteries can last twice as long and go double the distance, according to Recurrent. And that’s a conservative estimate. Tesla owners frequently report driving over 200,000 miles in their EVs, that too with minimal degradation. There’s even a 1.2 million-mile Model S out there that has undergone four battery replacements—bringing the average replacement mileage to a whopping 300,000 miles.

Most of us won’t go to such extremes. But in the rare case that you do require a replacement for whatever reason, how much will it cost in the future? Assuming the industry continues to proliferate at the same pace, Recurrent has an answer: astonishingly low!

Citing data from climate research firm RMI, Recurrent estimates that cell prices could reach $35 per kWh by the end of the decade. This would translate to pack prices of $50 per kWh, bringing the replacement cost of a 100 kWh battery to $4,500–$5,000, or about $3,375 for a 75 kWh pack. These estimates put EV battery replacement costs on par with replacing an internal combustion engine. J.D. Power says engine replacement can cost between $4,000 for a four-cylinder unit and more than $10,000 for a high-performance one. How those prices evolve down the line remains to be seen.

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As of today, replacing an EV battery can cost anywhere between $5,000 to $16,000, depending on the size of the pack and the vehicle’s make and model. In most cases, you never even have to think about this for new cars. It’s okay for most used EVs too, but experts recommend checking the health of a used pack before putting your money down.

Recurrent further said that owners may be able to offset battery replacement costs by reselling their used packs. As of today, a service shop usually keeps the used pack if it’s replaced. It will then be refurbished or sold to another company to repurpose it for energy storage, backup power, or other uses. However, industry experts expect the used EV market to grow substantially down the line, with millions of used EV owners who may be able to negotiate the sale of their own packs if replacement is required. Recurrent projects this will offset the price of a new pack by a further $10-20 per kWh, depending on the size, chemistry and health.

Naturally, all this circles back to the bigger picture: lithium prices are falling rapidly and EVs are poised to reach price parity with gas cars. Goldman Sachs said in October that lithium prices are on track to plummet from $149 per kilowatt hour in 2023 to just $80 per kWh in 2026. This 50% drop would help BEVs reach ownership cost parity with gas cars in the U.S. within the next couple of years, that too “on an unsubsidized basis.” But Goldman expects the EV landscape next year to largely depend on how the regulatory environment takes shape under the Trump administration.

But that won’t deter long-term adoption. “We think we’re going to see a strong comeback in demand in 2026 purely from an economics perspective. We believe 2026 is when a consumer-led adoption phase will largely begin,” the report concludes.

All this is to say that the rare scenario of you requiring to replace your battery pack doesn’t spell doom for the whole EV ownership experience. The lifespan of a modern battery is already great and seems on track to improve further. If replacement is required, experts say it may not cost as much as it does today in the future. And even then, there are clear ways to offset those replacement costs, as degraded packs may find multiple use cases in their second life.

Have a tip? Contact the author: suvrat.kothari@insideevs.com