Tesla and other EVs are seeing drops in the costs of battery kWh over time. What's interesting about this is that this drop isn't done and will continue on indefinitely. Batteries for EVs will become a cheap and readily available commodity.
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Declining Battery Costs for Tesla and Other EVs
Battery costs (and mineral costs for batteries) for Tesla and other EVs are dropping. For the last three decades, there has been a roughly 97% decline in the price of batteries, according to OurWorldData. In the coming decades, we'll see this trend continue, which will make batteries a cheap and readily available commodity. Just wait until you see what I calculate the cost per kWh for a battery in 2050 is.
The first noteworthy thing here is that EVs weren't really economically viable three decades ago. That changed around 2010, when Tesla began to make its "Original Roadster" and then a couple of years later, started work on the Model S. These vehicles were only feasible due to declining battery costs.
In 1991, the price per kWh for an EV battery was about $7,500. Unless you were making the ultimate expensive luxury car for half a million dollars or more, it just wasn't feasible to make an EV. Imagine a Model 3, with a 60 kWh battery, being bought in 1991. The price of the battery alone would have been $450,000 (60 kWh * $7,500).
In 2010, the price per kWh was $450, which is a big drop from $7,500 two decades prior. This allowed the original roadster to be built by Tesla with an approximate 53 kWh battery pack (according to CleanTechnica), costing $23,850 for the battery. That's much more reasonable and puts the price point of the vehicle in the affordability range of more people, albeit still expensive.
In 2018, the price per kWh was $181 and that is where the data from OurWorldInData stops. However, we can see sources that show that today, the price per kWh for a battery is around $133 per kWh.
Many expect this number to be driven lower over time as it has been in the past and to be around $113 per kWh in 2025, and $80 per kWh in 2030. The rate of decline is about 15% per year, and the prices don't decline every year. Sometimes they go up during supply chain issues such as 2020 and 2021.
The decline of battery costs won't stop in 2030 though...
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The Magic Price Per kWh For Batteries
I've long since believed that in order for EVs to truly be scalable to cover the earth, that the price per kWh for the battery needs to be somewhere between $30 and $50. We will most likely see this occur between 2030 and 2040, with my exact year estimate being 2036 for $30 per kWh. This uses an about 15% decline per year in cost per kWh, which is inline with how costs have declined so far and with forward predictions by multiple sources like Bloomberg.
This puts the 60 kWh battery for the Model 3 RWD at around $1,800. That's not bad at all. After a couple of hundred thousand miles in my car, I'd be willing to pay $1,800 to get a brand-new battery. It gets cheaper to replace the smaller the car, and this alleviates a primary concern of those buying an EV - the battery. Despite Elon Musk and Tesla reassuring that the latest batteries can go hundreds of thousands of miles or more, people still have this worry.
If you really want to look forward to cheap batteries that cost almost nothing, consider the 15% per year decline from $30 in 2036 to 2050. You get a price per kWh of $3 in 2050. That means a Model 3 RWD battery would cost about $180 + a little labor and assembly. That is true abundance from where we are today, with the same 60 kWh battery pack costing about $8,000 today.
In a few decades, batteries for EVs will be a cheap commodity that is abundant for everyone. Battery kWh cost declines will drive down the costs of EVs significantly, as well as drive down the cost for a battery replacement - which many potential EV buyers are concerned about today.
When it costs a couple of hundred bucks to change your EV battery to a brand new one, I don't think people are going to be worried too much about that at all!
Further in the future, the batteries are going to cost pennies on the dollar, but by that time, I wouldn't be surprised if a newer and more efficient source of energy is discovered.
The declining battery costs in 2030 and beyond will enable Tesla to build their sub-compact car, which I expect to be around $15,000. The battery pack for this car, around a 40 kWh pack, will be just $3,200 in 2030. Not bad at all. As the years continue on after 2030, having to replace the battery after a few hundred thousand miles will cost around $1,000 or less, depending on how soon the driver reached that point.
This is one reason I believe in Tesla. There are many other reasons, such as the leadership team and the wonderful technology, but the declining cost of batteries means that fuel for EVs will become practically free one day. This will also enable Tesla to build hundreds of millions of autonomous robotaxis for a very low cost, all run by AI software.
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What do you think about the declining cost per kWh for EV batteries? Will we reach a point where EV batteries are an abundant commodity?
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Hi! I'm Jeremy Noel Johnson, and I am a Tesla investor and supporter and own a 2022 Model 3 RWD EV and I don't have range anxiety :). I enjoy bringing you breaking Tesla news as well as anything about Tesla or other EV companies I can find, like Aptera. Other interests of mine are AI, Tesla Energy and the Tesla Bot! You can follow me on X.COM or LinkedIn to stay in touch and follow my Tesla and EV news coverage.
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