Critical Minerals and Energy Intelligence

Falling Battery Prices Perhaps Soon to Rise?

Last year saw another drop in lithium-ion battery prices dropped. According to BloombergNEF, the average price fell 6% from the previous year landing at $132 per kilowatt-hour. For fun, can you guess the price back in 2010? The answer is $1,200/kWh. Anyway, it’s not a surprise that they fell in 2021 but BNEF goes out of its way to point out that the second half of the year saw some upward pressure. Prices for key ingredients like electrolytes started creeping up.

The $132/kWh number is an average across different battery uses from EVs and buses to big storage projects. If you zoom in on just EVs, battery packs were going for about $118/kWh in 2021. Go even more granular, and you’ll find that the battery cells (the components inside the pack) were averaging around $97/kWh.

Interestingly, the cost breakdown between cells and packs has changed. Traditionally, it was about 70% cell and 30% pack. But thanks to new pack designs like cell-to-pack integration that ratio is now more like 82% to 18%. If you’re wondering where batteries are cheapest, the answer is of course China. Pack prices there averaged just $111/kWh. Compare that to the U.S. and Europe, where prices were around 40% and 60% higher, respectively.

Will Prices Keep Falling? BNEF seems to think so but it’s cautious optimism. The report suggests we could hit the golden benchmark ($100/kWh) by 2024. That’s a big deal because it’s the price point where EVs can compete head-to-head with gas cars in terms of cost, without relying on government subsidies. Obvious, rising material costs could slow things down, and if the industry has learnt anything from its experiences last year, it’s that the supply chain for battery metals such as cobalt, lithium, and nickel is far from robust. For now, battery prices are still heading in the right direction, but the road’s gotten a little bumpier lately.

Anthony Milewski

Chairman, Nickel 28 Capital

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