Li-ion battery pack prices rise for first time to $151/kWh

The cost of lithium-ion battery packs has increased for the first time since BloombergNEF (BNEF) started monitoring the industry in 2010. This is due to rising raw material and battery component prices as well as skyrocketing inflation. After more than ten years of decreases, the volume-weighted average price for lithium-ion battery packs across all industries has risen to $151/kWh in 2022, a 7% increase from the previous year in real terms. Higher adoption of less expensive chemistries like lithium iron phosphate was overtaken by the rising cost pressure on batteries (LFP). BloombergNEF anticipates that prices will continue to defy past tendencies by remaining at current levels in 2019.

Published

December 2022

Industry

Batteries

The given numbers are an average across a variety of battery end users, including various types of electric vehicles, buses, and stationary storage projects. Prices were $138/kWh on a volume-weighted average basis in 2022, especially for battery electric vehicle (BEV) packs. Average BEV costs were under $115/kWh at the cell level. According to this, cells represent 83% of the price of a pack on average. The usual 70:30 split has been deviated from the cell-to-pack cost ratio during the past three years. This is partly because pack design has changed, including the introduction of cell-to-pack strategies that have helped save costs.

Regionally, China had the cheapest battery pack costs at $127/kWh. The difference between packs in the US and Europe was 24% and 33%, respectively. The higher costs of manufacture, the wide variety of uses, and battery imports all contribute to these sectors’ relative immaturity. Low volume and customised orders drive costs higher for products at the top end of the spectrum.

If it weren’t for the increased use of LFP, a low-cost cathode chemistry, and the ongoing removal of pricey cobalt from nickel-base cathodes, prices may have increased much more in 2022. In 2022, LFP cells were, on average, 20% less expensive than lithium nickel manganese cobalt oxide (NMC) cells. But even inexpensive chemistries like LFP, which is especially vulnerable to lithium carbonate pricing, have felt the pinch of growing costs across the whole supply chain. In comparison to 2021, LFP battery pack costs increased 27% in 2022.

The report’s principal author, Evelina Stoikou, an associate in energy storage at BNEF, stated: “Raw material and component price increases have been the greatest drivers to the increased cell prices reported in 2022. Large battery producers and automakers have resorted to more aggressive measures, such as direct investments in mining and refining operations, to hedging against volatility in the face of these price rises for battery metals.

Although prices for important battery metals like lithium, nickel, and cobalt have recently softened marginally, BNEF anticipates that average battery pack prices will remain high in 2023 at $152/kWh (in real 2022 dollars).

In 2024, when additional extraction and refining capacity will be available, BNEF anticipates that battery costs will begin to decline once more. According to BNEF’s 2022 Battery Price Survey, average pack prices could drop below $100/kWh by 2026 based on the revised observed learning rate. This is two years later than anticipated and will make it more difficult for manufacturers to build and promote mass-market EVs in regions without financial assistance. The economics of energy storage projects might potentially suffer from higher battery prices.

Source: BloombergNEF

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