Ultra low cost electric vehicle batteries
Since their introduction in 1992, the cost of lithium-ion batteries has fallen by an incredible 97 percent, reflecting a learning rate of roughly 19 percent - or a 19 percent reduction in cost per doubling of lithium-ion battery scale.
Lithium-ion battery cost decline. Source: Hannah Ritchie, OurWorldInData
This steep cost decline was pivotal in making electric vehicles and short-duration grid energy storage possible. Powered by continual scaling and Wright’s Law-types of innovation in battery manufacturing (similar to the exponential cost decline of solar), the cost of lithium-ion batteries will continue to drop. NREL’s medium forecast finds that battery costs will drop in half again by 2030, making electric vehicles significantly cheaper than internal combustion engine vehicles. Their “low” forecast, showing more aggressive price declines, which has historically been more accurate, expects costs to drop in half by 2025, and to drop by a factor of 3 by 2030.
Image source: NREL
On “low” or aggressive price trajectory for batteries, electric vehicles will be at purchase price parity with internal combustion engine vehicles by 2025, substantially cheaper than combustion engine vehicles by 2030, and progressively cheaper in future decades. The cost decline in vehicle batteries will create an inflection point, further accelerating already surging electric car and truck sales.