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Published on January 19th, 2014 | by Zachary Shahan


EV Battery Prices — The Disruptive Drop In Prices Will Continue

January 19th, 2014 by  

falling battery pricesABB’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 articleBased 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.

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Image Credit: falling prices via Shutterstock

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About the Author

Zach is tryin’ to help society help itself (and other species) with the power of the word. He spends most of his time here on CleanTechnica as its director and chief editor, but he’s also the president of Important Media and the director/founder of EV Obsession and Solar Love. Zach is recognized globally as a solar energy, electric car, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, and Canada.

Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in. But he offers no professional investment advice and would rather not be responsible for you losing money, so don’t jump to conclusions.

  • So when are we going to see a LEAF prices drop then? The LEAF S model is just a cheaper stripped down version. Prices have not budged in the last 3 years.

    I bought an SL in 2011 for $33,190, fully loaded. I see well appointed 2013 SL’s on the dealer lot for $36,200, figure they could drop the price 2-3K and you’re back at the same 2011 price. It’s true the 2013 LEAF is superior to the 2011, the fact is the price is the same as it ever was.

    Maybe Nissan are now making a profit rather than selling a loss leader?

    Battery prices may drop, but I’m not convinced they have dropped as much as recent reports suggest they have.

  • Randy Bryan

    Two things to keep in mind: Differentiate the prices of raw cells from fully assembled-managed packs. And differentiate the retail price from the wholesale price. Most authors are not precise in their characterizing of price type.
    The article above falls into this trap with the $1000 price in 2009-2010 vs $200 now.

  • Wayne Williamson

    Pretty soon someone needs to come out with the “home” battery. Probably something on the order of 10kwh to start with and then add banks for longer stand by/filtering. I would probably pay 2k usd for a 10kwh grid buffer battery. I’m pretty sure I’ve been spending 2 or 3 hundred a year on apc’s that continually quit. Probably 8 of them in the house and need to replace at least 2 of them a year.

    • Doug

      Maybe an old Nissan leaf battery conversion.

  • JamesWimberley

    Is “e-mobility” really standard usage anywhere? The form is usually used for *electronics* not electricity, as in e-voting, e-government, e-democracy.

    • From what i understand, this is what electric vehicles / electrification of transport is called in most of Europe.

  • Sean

    so does this mean batteries for an electric bike will be cheaper now?

    • Probably.

      • Doug

        So, though Nissan and Tesla won’t admit it, they are both in the $200 kw/h range

        • i think so.

        • Israel Navas Duran

          I don’t think so, “kW/h” doesn’t mean anything to me (unless you are speeding up or slowing down energy consumption).

          • A Real Libertarian

            You don’t know what a KWh is?

          • I think he pretty well knows the difference between kWh and kW/h

    • Doug

      I’d like a rugged electric mountain bike with 15 mile range for under $1000.

      • I’ve put it on your Christmas list. Will see if you’re naughty or nice this year. 😀

  • Ross

    $100/kWh and 2000 cycles doesn’t seem like much a stretch from where we are.

    • Agreed. Shit is getting real now! 😀

      • jeffhre

        Yep, it has that ripe smell!

  • StefanoR99

    So Tesla really have called it when it comes to releasing their affordable model S. Come to think of it, how profitable is the model S now? If battery prices have fallen so much and the battery is the most expensive part of the vehicle they must be raking it in on every unit sold.

    • Tesla’s Q4 2013 earnings call will be about 3 weeks from now, so then you can hear how profitable they are.

      • Looking forward to asking some Qs about batteries & battery pricing on that call… & let me know if you have any you want asked. 😀

    • Doug

      The Model S profit margin is documented in prior financials. I recall 25% or so for the higher end models.

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