Posted on 11 Dec 2024
The annual price of lithium-ion battery packs has dropped to its lowest since 2017 due to factors including cell manufacturing overcapacity and a slowdown in EV sales, according to BloombergNEF (BNEF).
Kallanish understands the volume-weighted average price for lithium-ion battery packs this year was $115 per kilowatt-hour (kWh) – down 20% year-on-year. Factors such as economies of scale, low metal and component prices, and the uptake of lower-cost lithium-iron-phosphate (LFP) batteries are also behind the price drop, the research provider says in a new report on Tuesday.
In the past two years, battery manufacturers significantly expanded their production capacity in anticipation of increased demand for batteries for EV and stationary storage sectors. However, EV sales have been slower than expected. This led to an overcapacity in the market, with the current fully commissioned global battery-cell manufacturing capacity reaching 3.1 terawatt-hours – over 2.5 times the annual demand for lithium-ion batteries in 2024.
“The price drop for battery cells this year was greater compared with that seen in battery metal prices, indicating that margins for battery manufacturers are being squeezed,” comments Evelina Stoikou, the head of BNEF’s battery technology team. “Smaller manufacturers face particular pressure to lower cell prices to fight for market share.”
According to the report, China had the lowest average battery pack prices at $94/kWh. “Packs in the US and Europe were 31% and 48% higher, reflecting the relative immaturity of these markets, as well as higher production costs and lower volumes,” it notes.
The organisation forecasts battery pack prices to drop by $3/kWh in 2025, with further price decline expected over the next decade due to investments in R&D, improvement in manufacturing process, and capacity expansion. New technologies such as silicon and lithium metal anodes, solid-state electrolytes, and new cathode material will also play a role in price reductions.
“One thing we’re watching is how new tariffs on finished battery products may lead to distortionary pricing dynamics and slow end-product demand,” adds Yayoi Sekine, head of energy storage at BNEF. “Regardless, higher adoption of LFP chemistries, continued market competition, improvements in technology, material processing and manufacturing will exert downward pressure on battery prices.”
Source:Kallanish
