The Cost of Producing EV Batteries Falls to an Average of $132 Per kWh, According to Latest Data From BloombergNEF

The Cost of Producing EV Batteries Falls to an Average of $132 Per kWh, According to Latest Data From BloombergNEF

Author: Eric Walz   

Bloomberg New Energy Finance (BNEF), which is a leading provider of strategic research on the energy and transportation industries, released its annual battery price survey on Tuesday and the data shows that electric vehicle battery prices have fallen by 6% since 2020.

According to the survey, the cost of producing lithium ion EV batteries is now $132 per kWh, which represents a 89% drop over the past decade. Lithium-ion battery pack prices were above $1,200 per kWh in 2010 when there were far fewer EVs on the road. 

The high cost of electric vehicle batteries is one of the major hurdles for the widespread adoption of EVs, as the battery pack alone adds thousands of dollars to an EV's final cost.

For example, the 2021 Tesla Model 3 uses an 82 kWh battery pack. At the current cost of $132 per kWh, the battery pack costs roughly $10,824 to manufacture. It's one of the reasons that the 2021 Tesla Model 3 Long Range starts at $50,990. 

Tesla Chief Executive Elon Musk said before its launch that the mass market Model 3 would cost $35,000, but Tesla cannot sell it at that price and make a profit with the current cost of batteries.

It is important to note that the prices are an average across multiple battery end-uses, including different types of EVs, buses and stationary energy storage units. For electric vehicle batteries in particular, prices were $118/kWh on a volume-weighted average basis in 2021, according to BNEF.

At the cell level, average EV battery prices were just $97 per kWh. On average, the cells account for 82% of the total pack price. But over the past two years, the cell-to-pack cost ratio has diverged from the traditional 70:30 split due to changes to pack design, such as the introduction of cell-to-pack designs which allows for more cells to fit.


Prices are also falling for newer battery chemistries, such as lithium iron phosphate (LFP) batteries. The use of less expensive LFP batteries by automakers also continues to rise, while the use of expensive cobalt in nickel-based cathodes continues to decline.

According to the BNEF survey, LFP cells were almost 30% cheaper than Nickel Manganese Cobalt (NMC) cells in 2021. However, even low-cost chemistries such as LFP, are affected by prevailing lithium carbonate prices, which have risen in 2021 due to supply chain disruptions. Chinese producers have raised LFP prices by between 10-20% since September.

In addition, the impact of rising commodity prices and increased costs for key materials such as electrolytes has put pressure on the industry in the second half of the year, according to BNEF. 

"Although battery prices fell overall across 2021, in the second half of the year prices have been rising. We estimate that on average the price of an NMC cell is $10/kWh higher in the fourth quarter than it was in the first three months of the year, with prices now closing in on $110/kWh," said James Frith, BNEF's head of energy storage research and lead author of the report. "This creates a tough environment for automakers, particularly those in Europe, which have to increase EV sales in order to meet average fleet emissions standards. These automakers may now have to make a choice between reducing their margins or passing costs on, at the risk of putting consumers off purchasing an EV."

Rising raw material prices mean that in the near-term, average EV battery pack prices could rise again to $135/kWh in 2022. This could mean that the point at which prices fall below $100/kWh could be pushed back by another two years. This would impact EV affordability or manufacturers' profit margins in the short term. It could also hurt the economics of large energy storage projects, the data indicates.

"Prices for lithium have risen substantially this year as a result of constraints within global supply chains, rising demand in China and Europe and the recent production curbs in China," said Kwasi Ampofo, head of metals and mining at BloombergNEF. "Although we expect demand to keep growing in 2022, other factors such as global supply-chain constraints and China's production curbs should have been resolved by 1Q 2022. This will help to ease lithium prices."

The $100 per kWh price target is considered to be the point at which electric vehicles will cost around the same to produce as gasoline powered models, which will make them much more affordable to consumers and spur widespread adoption.

In 2021, many of the world's automakers shared their roadmaps highlighting how prices can be reduced even more, below $100/kWh. Ford Motor Co, for example, publicly announced targets of $80/kWh by 2030.

In May, Ford signed a memorandum of understanding (MoU) for a joint venture with battery maker SK Innovation called "BlueOval SK" to manufacture battery cells in the U.S.

BlueOval SK plans to produce approximately 60 gigawatt hours (GWh) annually starting mid-decade. By 2030, Ford expects annual energy demand for its vehicles will be up to 140 GWh annually in North America and up to 240 GWh globally.

Continued research in new battery chemistries and improvements in manufacturing across the supply chain will help to improve battery technology and reduce costs over the next decade. 

BNEF expects next-generation EV battery technologies, including silicon and lithium metal anodes, solid-state electrolytes, new cathode material and cell manufacturing processes, will play an important role in enabling these price reductions.

Although the long term outlook for battery costs is still positive, the path to $100 per kWh might take a bit longer.

Eric Walz
Eric Walz
Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.
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