Courtesy of CATL

CATL, BYD To Slash Battery Prices By 50% In 2024. BOOM! EVs Win!

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Three things must happen for the EV revolution to be complete — cheaper batteries, faster charging batteries, and more EV chargers that actually work. CATL and BYD are both on a path to decrease battery prices this year by as much as 50%, meaning battery packs at the end of 2024 could cost half what they did at the end of 2023.

CnEVPost reports that in order to secure its market position, CATL is sorting out production line resources and pushing for cost reductions that could drive the price of its VDA spec lithium iron phosphate battery cells down to RMB 0.4 per Wh. That translates to $56.47 per kWh hour. At that price, a 60 kWh battery that costs manufacturers $6,776.00 today will cost just $3,388 12 months from now, saving EV manufacturers over $3,000 per vehicle.

Is that 50% less? Not quite, but Chinese sources followed by CnEVPost say that Cao Li, vice president of Leapmotor, believes the price of VDA battery cells his company buys from CATL could drop further to RMB 320/kWh. The drop in battery prices is eerily close to a prediction made by Tony Seba a decade ago.

What Is A VDA Battery Cell?

Most of us here at CleanTechnica are familiar with cylindrical cells. Tesla has always favored cylindrical cells, starting with the 18650 (18 mm in diameter and 65 mm long) cells in the original Roadster and Model S. Later, it moved to 2170 cells (21 mm in diameter and 70 mm long) and is now producing 4680 cells.

The 46 mm diameter cells are rapidly becoming the new industry standard, with BMW saying it will use them in different lengths in its upcoming Neue Klasse electric cars. GM began by using pouch cells for its much ballyhooed Ultium batteries but has now changed horses in midstream and switched to cylindrical cells.

VDA is a standard originally created in Germany for rectangular prismatic battery cells that are 148 mm long, 26.5 mm wide, and 91 mm high. The reports from Chinese media claim that by this summer, CATL will be delivering 173 Ah VDA-spec LFP cells with 2.2C fast charging to automakers at an average cost of 0.4 RMB per Wh. Last year at this time, the cost of LFP cells in the VDA format was 0.8 to 0.9 RMB per Wh. By August, it had dropped to 0.6 RMB per Wh.

The batteries will be used by various companies in cars that sell for between RMB 100,000 and RMB 200,000 ($13,800 to $27,600). The 2.2C charging rate means they can be fully charged in 30 minutes or less. “From the upstream layout and the resource reserve of the material system, only CATL can make 2C batteries lower to a price point at the moment,” Chinese sources say.

BYD Will Match CATL

FinDreams, the battery manufacturing division of BYD, has issued an internal notice urging its teams to continue to reduce costs. CATL currently is the world’s largest battery manufacturer, with 37.4% of the global market. FinDreams (BYD) is second with a 25.7% market share, according to data released January 9 by South Korean market researcher SNE Research.

Chinese industry source 36kr says FinDreams maximized price reductions in 2023 through means including tender bidding, but the scope for cost reduction in current procurement remains huge according to that internal notice. In 2024, FinDreams will continue to strengthen the management of non-productive materials and reduce costs, the notice said.

Batteries have gone from being in tight supply a year ago — when the price of lithium spiked to stratospheric levels — to being in oversupply today. Some in the battery industry believe that prices below 0.4 RMB per Wh will leave battery makers with no profit, but in a competitive market it is possible for them to gain market share at a loss, although that is obviously not a long term strategy.

Implications For The EV Revolution

There has been much consternation and handwringing lately about the state of the transition to electric cars. The US and the EU have both backed off on their next round of exhaust emissions standards in the face of pressure from automakers and fossil fuel industry groups. GM and Ford are pushing back the timeline for introducing new battery-electric vehicles, particularly pickup trucks.

Mercedes has just announced it is backing away from its pledge to build only electric cars by 2030, saying it can’t make enough money just from selling electric cars. It now says infernal combustion engines will be part of its business plan until well into the next decade.

The headlines suggest that consumers are losing interest in electric cars, and there are a number of reasons for that. We were told five years ago that EV prices would fall along with decreases in the cost of batteries, but that hasn’t happened. The price of electric cars has remained stubbornly high despite lower battery costs. In fact, in many cases, the price of new electric cars and trucks has gone up rather than down.

GM teased us with promises of affordable battery electric versions of its Equinox and Blazer SUVs, but when they finally arrived, they were priced $5,000 to $15,000 higher than expected. Ford hiked the price of its most popular F-150 Lightning model by $20,000 before settling on only a $10,000 increase. No wonder people are losing faith in the EV revolution. This is not the way things were supposed to be.

Lately, there have been scary headlines about the cheap Chinese electric cars built in Mexico which the Association of American Manufacturers calls an existential threat to American car companies and all the workers who support the auto industry. Capitalists always favor capitalism as long as they are protected from competition. Yeah, that’s illogical, but there you go. Ideology always yields to self interest.

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The Takeaway

The upshot here is that battery prices are indeed falling just as Tony Seba predicted 10 years ago. That is great news for the EV revolution. In the final analysis, lower prices for electric cars will do more to make that revolution complete than all the mandates in the world.

Some of the comments to our story about the AAM report suggest that not all Chinese-made cars are up to the standards of quality and reliability people expect and that’s on them. Nobody will buy crappy cars no matter what the price, so they need to step up their game and make compelling electric cars, not just cheap ones.

There is no guarantee that the low battery prices available in China will translate to other markets, especially the US which has erected a barrier to batteries made with materials or components sourced from Chinese-owned companies. That provision will protect America’s friends, but make it harder to lower battery prices enough to bring more affordable electric cars to American consumers. There has been tremendous opposition to CATL building a battery factory in the US.

The takeaway here seems to be that lower battery prices from CATL and BYD will greatly benefit EV customers in China and other Asian countries first, Europe second if the EU does not erect trade barriers to Chinese made cars, and the US last, thanks to its protectionist stance.

Lower battery prices are one part or the puzzle. 2.2C charging is part way to the faster charging batteries we need in order to make driving an EV more convenient. Charging infrastructure is getting better but still a long way from being adequate. All of this means the transition to electric cars just got a big boost, but has a way to go before it crosses the finish line. No matter how you look at it, this is good news after all the doom and gloom about electric cars that has been in the news lately as legacy industries use every dirty trick in the book (it’s a rather large book) to slow down the inevitable.


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Steve Hanley

Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. He is proud to be "woke" and doesn't really give a damn why the glass broke. He believes passionately in what Socrates said 3000 years ago: "The secret to change is to focus all of your energy not on fighting the old but on building the new." You can follow him on Substack and LinkedIn but not on Fakebook or any social media platforms controlled by narcissistic yahoos.

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