EV battery costs fell to new lows in 2021, but could climb in 2022: report

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Higher raw material costs could push the average price of a lithium-ion battery pack to US$135 per kilowatt-hour in 2022, a 2.3-per-cent gain from this year’s level, according to BloombergNEF’s 2021 Battery Price Survey. It would mark the first increase in prices since at least 2010, when the average cost was US$1,200/kWh.

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BNEF still predicts battery prices can fall as low as US$100/kWh by 2024, though that timing is now less certain. Analysts say that target could be pushed back two years if inflation pressures persist, hurting the economics of energy storage technology.

The inflation threat presents a risk to the transition from fossil fuels, with ever-cheaper lithium-ion batteries critical for the mainstream adoption of electric vehicles. Ford and Renault SA have both set battery pack price targets of US$80/kWh by 2030, and Nissan announced Monday a strategy to bring the cost down to US$75/kWh by 2028.

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“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,” said James Frith, BNEF’s head of energy storage research. “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.”

Even though battery prices dropped 6 per cent this year to a record-low US$132/kWh, costs had already started rising in the second half, according to BNEF. One reason is the higher cost of lithium iron phosphate after Chinese producers raised prices by as much as 20 per cent since September. BNEF expects some constraints, such as China’s production curbs due to tight power supplies, to ease by early 2022.