Battery pack prices fall again

BNEF (Bloomberg New Energy Finance) has come out with new data for average battery pack prices.  In 2019, average prices fell again, by 13%.  Since 2010, battery pack prices have fallen by an average of 19.4% per annum, and if we exclude 2015, when Tesla's Powerwall was introduced, when the average battery pack price fell 35.4%, the average decline has been 17.4% per annum.

BNEF forecasts that the pack price will fall below $100/kWh in 2023 (down from 2025 last year), which is more or less a compound rate of decline of 10% per annum.  But if we assume a 15% p.a. rate of decline, which is slower than the rate of decline over the last decade, then the $100/kWh line will be crossed in 2022.

$100/kWh is the point at which most analysts believe EVs will have the same sticker price as ICEVs (petrol/diesel cars).  EVs are already cheaper to run than ICEVs because electric engines are 4 times as efficient as petrol engines and have 100 times fewer moving parts so are easier and cheaper to maintain.  So, in 2022 or 2023 EVs will start to dominate the car/light truck market.

So far, EV manufacturers have chosen to expand range rather than cut car costs, as exemplified by the Nissan Leaf, the first modern EV:

From now on, though, the fall in battery-pack costs will feed through into falling EV sticker prices.  There will probably be a big spread of ranges available with EVs, from those with perhaps 100 miles (160 kms) through to luxury cars with 300 miles (480 kms) range. The implications for the oil price long term are obvious.


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The plunge in battery prices

Electric car battery prices dropped 13% in 2019, will reach $100 in 2023