The Cost Of EV Batteries Has Fallen 90% Since 2010

According to IEA, batteries for electric vehicles have fallen in price, on average, 90% since 2010, which is not only driving lower EV prices since batteries typically have been the most expensive component, but this massive drop in cost is also making EV battery replacement and upgrades a far better option for the future.

Let’s talk about batteries this week.

The Big EV Battery Problem

EVs have several advantages over traditional gas-powered automobiles. These include a far simpler drive train with no or simplified transmissions, motors that can last beyond the useful life of the vehicle, more advanced electronics (they tend to be rolling computers), and lower cost of ownership (maintenance and energy cost). But they have one huge disadvantage, and that is the Lithium-Ion Battery.

These batteries have been very expensive, for instance in my old 2019 Jaguar I-Pace electric a tow truck driver damaged my battery resulting in a repair estimate that was double what the car was then worse (around $110K). The batteries sit at the bottom of the car and, while generally contained in a hardened steel casing, can be damaged by road debris or submerged in water, mainly if that road debris has resulted in a hole in the otherwise waterproof battery casing.

Battery technology has limited the speed in which the batteries can recharge, limited the usable range of EVs, and resulted in battery problems that have made electric vehicles unsafe to leave in your garage because the battery could catch fire and burn down your house. (This almost happened to me with an early lithium-powered E-Bike, and the fire almost made me homeless, and the resulting problem also caused the bike company to go out of business.).

My old I-Pace is currently under a battery recall, which has left many cars charging outside or awaiting repairs, much to the consternation of I-Pace owners.

What This Massive Cost Reduction Means

It means far less expensive cars. You mostly see this right now with Chinese cars, which are advantaged not only because of cheap batteries but also because China aggressively owns most of the raw materials needed to make them. On top of cheap batteries, China also enjoys low labor costs and aggressive government financial help, making it increasingly impossible for automakers not located in China to compete. China car makers are slowly forcing everyone else out of the market.

In effect, this massive drop in battery costs has created a price war, one in which China has a significant advantage in. While Tariffs have been implemented to different degrees globally, they are unlikely to be successful long term because they only cover up the problem, they don’t eliminate it, and these cost advantages don’t just apply to electric cars but to a host of other coming technologies in transportation like electric busses and trains, robotics, and defense technology.

On the world stage, China appears to be becoming unstoppable.

Wrapping Up:

The cost of EV batteries has dropped 90%, which is slowly having a price impact on EVs outside of China, but in China, it is having a far greater impact. This cost reduction, coupled with China’s other advantages in materials costs, labor costs, and financial government support (the US is countering with some government support), is setting the stage for China to own the future EV market.

To fight back, new battery formulations are coming, which could circumvent China’s control of some of the critical elements and create batteries that perform better. But things continue to move very fast on the EV front, and, likely, many of the existing car companies won’t be around once this EV revolution completes unless they step up their competitive game much more than they currently are.

Rob Enderle is a technology analyst at Torque News who covers automotive technology and battery development. You can learn more about Rob on Wikipedia and follow his articles on Forbes, X, and LinkedIn.