Bloomberg New Energy Finance (BNEF) has released the results of its 2019 Battery Price Survey, finding that industry-weighted average battery pack prices have already fallen to $156 per kWh. This is over 13% lower than the 2018 average ($180/kWh, when adjusted for inflation), and BNEF foresees cost reductions continuing, with $100/kWh potentially being reached by 2023. Let’s dive in.
The cell/pack split ratios in my above graphic are derived from BNEF’s 2018 data, with prices updated to 2019. Here’s the original 2019 pricing data as tweeted by BNEF (click on graphic to see the full animated graph):
Battery prices, which were above $1,100 per kilowatt-hour in 2010, have fallen 87% in real terms to $156/kWh in 2019. By 2023, average prices will be close to $100/kWh.
— BloombergNEF (@BloombergNEF) December 3, 2019
Note that BNEF’s pricing data is based on the industry volume-weighted average, and is not intended to be representative of cost leaders such as Tesla/Panasonic, CATL, and others. Our understanding is that Tesla is already somewhere below $100/kWh at the cell level, and likely below $140/kWh at the pack level. Volkswagen has hinted that its cell prices (likely supplied by CATL, based on NCM 811 chemistry) are also below the $100/kWh level.
BNEF projects that the overall industry’s cost reductions will continue, with $100/kWh at the pack level likely to be reached by around 2023, as stated in the above tweet. This is the point at which mass market electric vehicles (BEVs) are expected to reach sticker price parity with “equivalent” combustion vehicles, whilst larger vehicle classes and premium vehicles have already passed parity in several cases. All BEVs are typically already more affordable than combustion vehicles on a total-cost-of-ownership basis, due to substantial lifetime savings on fuel and maintenance costs.
Near-Term EV Battery Trends
There’s some debate over whether the ongoing reduction in the cobalt content of battery cathodes, and the corresponding increase in nickel content (in the popular NCM 811 and NCA cathode batteries) will lead to a nickel price squeeze in the medium term, if nickel supply doesn’t grow with this fast emerging demand. Currently, a BEV with a decent-sized 55 kWh battery (e.g., the Tesla Model 3 SR Plus) may contain between 40 and 60 kg of nickel (depending on exact chemistry), with smaller-battery PHEVs containing less than half of that. Call it 38 kg per EV on average.
At an EV market share of 2.5% this year or early next (around 2.25 million new EVs per year), this approximates to around 85,000 metric tons of nickel demand for EV batteries, of the annual total nickel supply of around 2.3 million tons. Only around 60% of the global supply (roughly 1.4 million tons) is Class 1 nickel, suitable for use in batteries.
As EV market share approaches 10% in the coming few years, with the same high-nickel cathode chemistries, this will require 340,000 tons, some 25% of 2018–2019 global total Class 1 nickel supply. This level may be manageable, but if NCA and NCM batteries are going to take us towards 20% EV market share and beyond, then continually increasing total nickel supply will obviously be necessary. Emerging battery technologies like metal anodes (likely lithium-rich) will make existing NCA and NMC (and most other) battery cathodes go further for the same amount of raw materials, as will solid-state and semi-solid electrolytes. These technologies are already well established in the development pipeline.
Meanwhile, the venerable lithium-iron-phosphate (“LFP”) chemistries are not standing still. Battery makers are expecting LFP to remain a central pillar in the coming years, especially for the China market, with energy densities reaching beyond 200 Wh/kg at the cell level by 2020 (e.g., BYD, CATL, and BJEV). The cathode materials in LFP (iron, phosphate, oxygen, lithium, and sometimes manganese) are highly abundant and have global supply volumes well beyond the needs of even a 100% EV market share.
We expect #LFP batteries to be 1 of major choices in post-subsidy era, says BYD #lithium #battery R&D center deputy director.
Its thermal traits are better & fire safety costs lower than NMC. As tech develops, BOM cost to drop further & will be much cheaper than NMC811, he added. pic.twitter.com/PdORDjqqKc
— Moneyball (@DKurac) December 3, 2019
Volkswagen has also recently indicated that it will look to use next-generation LFP batteries in the large volume of China-market BEVs it is planning to build in the coming years.
In summary, nickel will likely be able to ramp up to meet the growing demands for NMC 811 and NCA batteries. If there is a nickel supply bottleneck, elevated nickel prices will encourage more market entrants on the supply side. In the unlikely event that further battery price reductions for NCA and NCM chemistries are permanently curtailed by high cobalt and nickel material prices, there are several other already existing chemistries and approaches able to carry the baton forwards. LFP chemistries in particular are still strongly improving their energy and cost performance, and are largely invulnerable to raw material pricing issues.
Fossil-Backed EV FUD Still Abounds
On a related note, MIT’s “Energy Initiative” group recently published a FUD-laden “Insights into Future Mobility” report (sponsored by an array of fossil fuel companies, including ExxonMobil, Shell, BP, Chevron, Aramco, Equinor, GM, & Toyota).
One of its central theses is that “the price of lithium-ion battery packs is likely to drop by almost 50% between 2018 and 2030, reaching $124 per kilowatt-hour.” (MIT report, page xvi).
The report concludes from this that, “our cost analysis indicates that a mid-sized battery electric vehicle with a range of 200-plus miles will likely remain upwards of $5,000 more expensive to manufacture than a similar internal combustion vehicle through 2030.” (MIT report, page xvi).
MIT’s projected $124/kWh battery pack price in 2030 — that it deems inevitable on the basis of cobalt/nickel constraints — is obviously well out of tune with the trends on the ground, and doesn’t acknowledge the already existing plural pathways that the industry is pursuing, as discussed above. Colin Mckerracher (head of advanced transport at BNEF) has rightly rebuffed the MIT perspective in a recent tweet:
Saying battery pack prices only get to $124/kWh by 2030 is a big call considering last year they were already at $176/kWh (volume weighted average).
— Colin Mckerracher (@colinmckerrache) November 19, 2019
Conclusion: The rEVolution Continues!
With battery pack prices continuing to improve, by 13% in the past year, and heading towards $100/kWh by 2023 or so, the EV revolution will roll on. As well as improving battery prospects, there are still efficiencies to be found in inverters, motors, aero, tires and wheels, overall weight, and many other areas, all of which have compounding effects on making EVs ever more capable and ever more affordable.
Have you already joined the EV revolution, or are you planning to soon? Please share your thoughts in the comments.