BNEF reports 14% drop in battery prices in 2023

In a recent paper, the European Network of Transmission System Operators for Electricity (ENTSO-E) has forecasted a significant increase in electricity demand from both buses and trucks, as Europe progresses towards greater electrification of its transport sector. This projection, which extends to the regions of EU27, Norway, Iceland, Switzerland, and the United Kingdom, indicates that by 2030, the electrification of buses and trucks will lead to a substantial rise in their electricity consumption, marking a pivotal shift in the energy demands of the transportation sector.
Despite the dip in prices, the demand for batteries, particularly in electric vehicles (EVs) and stationary energy storage sectors, is expected to surge by 53% in 2023, amounting to 950 gigawatt-hours. However, this demand fell short of industry forecasts, leading to reduced plant utilisation rates among major battery manufacturers and a reassessment of production targets by EV and battery companies.

A senior associate at BNEF, highlighted the shift in pricing dynamics, noting that the price reduction this year is largely driven by increased production capacity and subdued demand, rather than the traditional factors of scale learning and technological innovation.

The report also provides insights into regional price variations and technological trends. In 2023, battery electric vehicle (BEV) packs averaged $128/kWh, with cells constituting 78% of the total pack price. Geographically, China boasted the lowest average prices at $126/kWh, while the US and Europe saw higher prices, reflecting market immaturity, production costs, and application diversity.

The industry’s inclination towards lithium iron phosphate (LFP) chemistry has led to the lowest global weighted-average prices for these packs and cells, at $130/kWh and $95/kWh, respectively. This is the first time LFP average cell prices have dropped below $100/kWh.

Looking ahead, miners and metals traders anticipate further easing of key battery metal prices in 2024, setting the stage for another potential decrease in average battery pack prices to $133/kWh. BloombergNEF forecasts that technological advances and manufacturing improvements will continue to drive down prices, potentially reaching $80/kWh by 2030.

The head of energy storage at BNEF, underscored the dynamic nature of battery prices in recent years, pointing out the impact of local production incentives and regulations on critical minerals. The localisation of battery manufacturing, particularly in the US and Europe, may introduce new pricing complexities due to higher production costs compared to Asia.

In summary, BloombergNEF indicates a significant price reduction in the battery market, influenced by various factors including production capacity, market demand, and regional developments. This trend is poised to shape the future of the battery industry and its role in the global transition to cleaner energy sources.

Source: Lithium-Ion Battery Pack Prices Hit Record Low of $139/kWh | BloombergNEF

Source: Lithium-Ion Battery Pack Prices Hit Record Low of $139/kWh | BloombergNEF
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