- Research published by Goldman Sachs suggests that EV battery prices are set to drop more rapidly than others have suggested so far.
- The investment bank projects that the price per kWh of EV batteries will reach $80 per kWh in 2026. That’s down from a predicted $111 by the end of this year, and a price of $149 from 2023 – representing a drop of nearly 50% since last year.
- If the prediction turns out correct, this could be great news in the push for EVs to reach price parity with their petrol and diesel-powered counterparts.
EV battery prices are on a downward projectory
The prediction has come after recent years have shown a consistent drop in the average prices of batteries across the globe – despite global inflation. Battery prices stood at $153 per kWh in 2022, dropping to $149 in 2023, and now predicted to drop to $111 by the end of 2024. New research from Goldman Sachs estimates that this average cost could be as low as $80 per kWh, by 2026 – representing a near halving in price compared to last year.
The research puts the estimated EV battery price drop down to two factors. Firstly, there is the multitude of new battery technologies launched. Solid state batteries are a relatively new technology, allowing for sky-high driving range, but once in mass production, there is the possibility that these could be produced at a cheaper cost than their counterparts. Additionally, the research says a drop in the price of critical minerals, such as lithium and cobalt, is also contributing to this cost reduction.
This existing price reduction, and forecast for the future, could help bring down the price of upcoming EVs. Data shows that in current EVs, batteries account for around 28% of the total cost of an average large EV, in 2024. This proportion of total cost is also set to drop in the coming years. This could help an increasing number of EVs become just as initially affordable as their ICE counterparts, as Vauxhall has already achieved with its recent EV, helping to drive adoption. On the other hand, new EV prices dropping further could reduce purchase confidence of current models. Used EVs are already hitting record low prices, which is driving adoption in the used market, but may be putting off buyers from the purchase of new models.