There are plenty of things that go into making an electric vehicle, but one of the most prominent — both in terms of engineering and cost — is the battery that powers the whole thing. By and large, that means lithium-ion batteries, though there’s been an uptick of interest lately in their sodium-ion counterparts. But a promising industry trend shows lithium-ion batteries getting less expensive, and that could have positive implications for EVs as a whole.
A survey conducted by BloombergNEF revealed that the average price of lithium-ion batteries dropped by 20% in the last year, the largest such drop recorded in the seven years that data has been monitored. As Bloomberg‘s Linda Lew observes, this brings the cost of lithium-ion batteries down to $115 per kilowatt-hour.
There were a number of factors at work here, including the growth of lithium iron phosphate batteries across the industry. This also, Lew writes, puts the industry on a pace to achieve parity in the costs of electric vehicles and internal combustion vehicles in or around 2026. Whether that pace will continue is an open question; Lew also points out that one of the factors leading to the 20% drop in cost — overproduction of batteries — is unlikely to recur in 2025.
As Autoblog’s Elijah Nicholson-Messmer points out, parity between EVs and their internal combustion counterparts might not translate into affordable EVs. That’s less because of anything specific to EVs and more because new cars are, as a whole, getting pricier.
Still, some automakers are pushing for more entry-level EVs, and it isn’t hard to see how spending less on batteries will get them to that place. If and when we reach a point where the only think differentiating EVs and internal combustion vehicles is the system that powers them, it will be a watershed moment for the industry.
