Published on January 19th, 2014 | by Zachary Shahan22
EV Battery Prices — The Disruptive Drop In Prices Will Continue
January 19th, 2014 by Zachary Shahan
ABB’s director of electric vehicles (“e-mobility,” as it’s called in Europe), Hans Streng, recently wrote a pretty popular piece on how fast electric vehicle battery prices are coming down and how much that’s going to transform the auto and energy markets. Our readers asked for more details following the repost, especially regarding the statement that “battery prices are dropping by 20-30% each year.” So, I reached out and got the following response (slightly edited):
Don’t expect any gradual effect in the e-mobility industry. Volumes increase exponentially and prices decline exponentially.
Here are recent price movements as reported by different media.
1. An article from August 2010 where price declines of 19-25% were observed in the market. Not on a basis of extrapolated erosion but on a basis of disruptions in the supply chain. Companies like Samsung and Panasonic simply have to go for forward-pricing and pre-emptive actions to grab market share in what is expected to be a cut-throat longterm battery-battle. If you google ”samsung panasonic battery price war,” then you will find many more articles from around that time.
2. In November 2011, a nice high-level insight in the battery landscape is given in the following article. Based on the prevailing EV forecasts, the battery market should increase from magnitude 1 billion in 2011 to magnitude 10 billion in 2015. Clearly, this will sharpen the battle in battery prices.
3. In April 2012, Dr. Rudolf Krebs who heads the overall Volkswagen E-mobility program states that he expects the price of an electric vehicle within three years to be on-par with the equivalent combustion-motor vehicle. This is expected on basis of the increase in EV volume but more importantly because of the battery-price decline. Bloomberg at the same time observes that the battery prices in 2011 have declined 14% YoY and 30% in the 2009-2011 period. They expect battery prices to go down to 150US$/kWh by 2030, but this is again a straight extrapolation and does not take disruptions into account; the price levels in 2013 (see next point) are already at 200US$/kWh.
4. A more recent Bloomberg analysis shows that the battery-price decline in the 2010-2012 period is 40%, so an even steeper decline than in the 2009-2011 period and way beyond a 5-7% YoY ”normal” erosion. A related article correctly talks about the ”exponential” effects in storage capacity and prices. It is not a YoY mature market decline but an avalanche effect, similar to what happened in the PV industry with collapsing prices and in the LCD industry in the 90’s where exponential/disruptive effects turned the industry upside down.
5. August 2013: a trendwatch analysis in Germany where the current battery prices of Tesla are mentioned (200US$/kWh) and projections for 2016 are given as low as 120US$/kWh. If you compare this with the 2009-2010 price levels of around 1000US$/kWh, then you see that the price curve is far from a ”mature market erosion-profile.” It shows the typical early market disruptions driven by strategic moves and anticipated market explosions.
*Full disclosure: I write for ABB Conversations. That said, I wouldn’t write about a story on CleanTechnica unless I really thought it deserved coverage, and just for clarification, this article wasn’t sponsored in any way. Also, as noted at the top, follow-up commentary on this matter was requested by our readers.
Image Credit: falling prices via Shutterstock
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