EV battery prices cross ‘historic milestone’

Source: By David Iaconangelo, E&E News reporter • Posted: Wednesday, December 16, 2020

The price of lithium-ion batteries fell for the first time this year to levels that would allow automakers to produce electric vehicles for the same cost as gas cars, according to an analysis this morning by market researcher BloombergNEF.

Clean energy analysts have long cited $100 per kilowatt-hour as the crucial price point for lithium-ion battery packs used in EVs. That threshold may have been eclipsed this year in an isolated number of cases involving electric buses and commercial vehicles sold in China, BloombergNEF said.

James Frith, head of energy storage at the firm, called it a “historic milestone” and predicted that by 2023, the average price of batteries would pass that threshold.

“Although we’re not quite there yet for passenger EVs, it shows it’s actually something that’s achievable,” he said.

Frith did not disclose which battery and bus companies were able to cross the key $100-per-kWh threshold, saying the firm had undertaken an anonymous survey.

But he noted that electric buses in China often use lithium iron phosphate batteries — a chemistry that’s cheaper but less energy dense than the nickel-based alternatives that go into many battery-electric vehicles. When sold outside of China, the price of those buses tends to rise, as companies fold in extra costs stemming from their local operations, said Frith.

The importance of achieving “price parity” for electric cars was underscored by a newly launched corporate collaborative yesterday, known as the Corporate Electric Vehicle Alliance. Its 21 members, which include Amazon.com Inc., Exelon Corp. and Uber Technologies Inc., cited it on a list of guiding principles and pledged to support a number of federal and state policies that could bring down the upfront price of EVs.

At least one formidable obstacle for price parity is the prospect of battery-mineral price spikes, driven largely by an explosion of EV demand. Market researchers from multiple firms and automakers like Tesla Inc. have warned that by the mid-2020s, minerals like lithium and cobalt used in EV batteries could experience shortages. One U.N. panel found this past summer that to meet the Paris Agreement’s climate goals, demand for minerals like cobalt, nickel and lithium will leap tenfold (Climatewire, June 26).

Supply shortages are “certainly an issue,” acknowledged Frith. If a record price spike were to occur — like the one that hit lithium in 2018 — it would delay EV batteries’ race to price parity by about two years, he said.

Some battery makers are beginning to insulate themselves from such shortages by stockpiling raw materials and shrinking their use of cobalt, a precious metal that also has been associated with human rights violations in Congo, the world’s main source.

EV makers may eventually be able to turn to alternatives like solid-state batteries, which use far less precious metals, in coming years, said Frith. At least one major automaker, Volkswagen AG, wants to incorporate solid-state batteries in its EVs as soon as 2024, although that hinges on a startup partner’s ability to scale up inventions from the lab to the factory.

The BloombergNEF analysis also notes how far the cost of batteries has fallen over the last decade, fueled by purchases of smartphones and laptop computers. In 2020, the average per-kWh cost for lithium-ion was $137, down from over $1,100 in 2010.

By 2030, prices could go as low as $58, the firm predicted, possibly by substituting lithium-ion for solid-state chemistries.

Once EVs grow broadly affordable for the mass market, said Frith, automakers are likely to diverge in their choice of batteries. “A race to the bottom on price won’t be the main driver anymore.”