A recent report from Goldman Sachs indicates a continued decline in electric vehicle (EV) battery prices, projecting a significant reduction over the next two years. The analysis estimates that the average global battery price has decreased from $153 per kilowatt-hour in 2022 to $149 in 2023. This downward trend is expected to continue, reaching $80 per kilowatt-hour by 2026—a nearly 50% drop from 2023 levels. This price point is crucial for achieving cost parity between electric and conventional fuel vehicles.
The primary factors driving this price decline are technological advancements and falling raw material costs. Innovations in larger battery and battery pack designs contribute to reducing costs and increasing energy density by 30%, effectively managing battery pack sizes. Tesla, for instance, has begun producing its large-format 4680 cells, although it still faces challenges in reducing manufacturing costs.
Additionally, the decreased prices of raw materials such as lithium and cobalt play a significant role. While these materials previously caused a spike in battery costs in 2022, prices are now declining and are expected to continue this trend until at least 2030. This accounts for approximately 40% of the anticipated reduction in battery costs.
Goldman Sachs had earlier predicted a 40% drop in EV battery costs between 2023 and 2025. Analysts anticipate this trend to bolster EV sales, potentially allowing electric vehicles to capture 50% of the U.S. market by 2030. Despite supply chain challenges amid the pandemic, EV battery prices have steadily decreased since the debut of Tesla's Roadster over a decade ago. Data from the U.S. Department of Energy highlights a 90% reduction in battery prices compared to those earlier times.
