Manufacturers have been producing for years electric cars They hid behind the fact that the cost of batteries was the biggest challenge to overcome, so electric vehicle prices were higher than internal combustion vehicles. But now a new report is on the table the strong reduction in battery costs which leaves many groups without arguments.
According to the consulting firm Benchmark Lithium The global weighted average price of lithium batteries fell 8.7% in August and fell below $100/kWh for the first time since August 2021.
At the moment, The kWh in the cell has reached 98.2 dollars a figure that represents a decrease of 33% From the peak in March last year, when the price rose to $146.4/kWh due to issues such as the war in Ukraine and geopolitical tensions, as well as the wave of inflation.
The report points out that the reasons for this sharp decline lie in the following factors: Falling prices for important raw materials such as lithium, nickel and cobalt.
The decline in prices for metals used to form batteries has led to a decline in the cost of components such as cathodes and anodes. According to the benchmark, shares for cathodes and anodes have fallen by 41.9% and 17.6%, respectively, so far this year.
As for lithium, despite the apocalyptic predictions of many gurus, not only has production not collapsed due to lack of supply, but it has actually grown. and prices have fallen dramatically. According to benchmark lithium data Lithium prices are down 52% Since the beginning of the year, the price index for lithium hydroxide has fallen by 58%.
The challenge now is to reach the next stage, which has been described by many as the final turning point. The $80 per kWh. Analysts believe this figure will allow manufacturers to produce electric cars that cost the same as their internal combustion engine counterparts.
As we can see in the graph, the trend is unstoppable and the most important fact is that the cost of batteries has fallen by 80% in the last decade. A dynamic that, according to experts, will continue in the coming years.
An aspect that will not only benefit the production of electric vehicles, but will also advocate the expansion of backup power systems for renewable energies. A crucial point that will allow them to improve their efficiency and profitability and thus continue their expansion.
An average cost reduction that is not the same in all markets. And this is where the biggest boost in the production of electric cars comes from. China.
The consulting firm says that prices for NCM811 prismatic cells in China have fallen even further, reaching a minimum of $82.6 per kWh which means even lower costs to that of the LFP cells which are priced at $85.7/kWh, allowing Chinese manufacturers to get closer to $80 per kWh in the cell, paving the way for them to achieve that 100 dollars per kWh in the package.
The bottom line is that the era of introducing small compact cars at premium sedan prices is coming to an end and it’s time for us to see cheaper prices for volume models.
Western corporations must strive to reduce costs, reduce prices and increase volumes if they do not want to become completely irrelevant in the short or medium term in the face of the unstoppable growth of Chinese manufacturers.