A new study from the Stockholm Environment Institute has found that the price of lithium ion (Li-ion) battery packs has been falling far faster than previously reported, with the price per kWh dropping by a whopping 70 percent since 2007. It’s a surprising statistic—previous studies anticipated we would not see these prices until 2020—and points to a trend that could lead to electric cars becoming cost-competitive with regular gasoline-fueled cars within the next decade.
The study, which was conducted by Björn Nykvist and Måns Nilsson from the Stockholm Environment Institute, has just been published in the journal Nature Climate Change, and analyzes the price of Li-ion battery packs from 80 different sources between 2007 and 2014—as Phys.org notes, the majority of electric car manufacturers themselves do not disclose the price of a car’s battery.
What Nykvist and Nilsson found was that while battery packs typically cost around $1000/kWh in 2007, that price has steadily declined to $300/kWh, constituting an eight percent drop in price each year. If this trend continues, then we could see battery packs fall to around $150/kWh within the next ten years—and at that point we could see electric vehicles become cost competitive with gasoline engine cars, and that could transform the market and bring an end to the elite status of the EV.
In short, once the price of li-ion battery packs hits this point, auto makers will either have to drop the price of EVs, increase the range of the vehicles or split the difference. Additionally, Nykvist and Nilsson note that with companies such as Tesla and Nissan ramping up production of electric cars, economies of scale will cause a further decline in prices. Which, if combined with environmentally responsible power sources, could bring much needed reductions in carbon emissions.