Electric vehicle batteries have officially dipped under the critical $100 per kWh price point for the first time.
However, it was for the price of battery packs for electric buses in China.
Price per kWh is a metric used to track the price of batteries.
It can be used to talk about the cost of battery packs or battery cells.
For example, Tesla was achieving a cost per kWh of $150 for its Model S battery pack, it would mean that the battery pack costs $15,000 since it has a capacity of 100 kWh.
In the auto industry, it is generally accepted that $100 per kWh for battery packs is the price point needed for electric vehicles to be cost-competitive with gasoline-powered vehicles.
Now electric cars are already more cost-effective than gasoline vehicles based on the total cost of ownership for many people depending on use cases thanks to much lower fuel costs.
However, the $100 per kWh battery cost price point is critical for the wider adoption of electric vehicles by making EVs cost-competitive at the sticker price, which is an important psychological barrier for many buyers.
Today, Bloomberg NEF, which has been tracking battery costs, announced that a cost under $100 per kWh has been reported for the first time.
It was for battery packs for electric buses in China:
“For the first time, battery pack prices of less than $100/kWh have been reported. These were for batteries in e-buses in China. While these were the lowest reported price, the volume-weighted average price for e-buses in China was slightly higher, $105/kWh.”
James Frith, BNEF’s head of energy storage research and lead author of the report, commented on the milestone:
“It is a historic milestone to see pack prices of less than $100/kWh reported. Within just a few years we will see the average price in the industry pass this point. What’s more, our analysis shows that even if prices for raw materials were to return to the highs seen in 2018, it would only delay average prices reaching $100/kWh by two years – rather than completely derailing the industry. The industry is becoming increasingly resilient to changing raw material prices, with leading battery manufacturers moving up the value chain and investing in cathode production or even mines.”
While it wasn’t for passenger electric cars, the segment is not trailing for behind.
BNEF estimates that the average battery cost in 2020 was $137/kWh and it is going to reach $100/kWh by 2023:
“Lithium-ion battery pack prices, which were above $1,100 per kilowatt-hour in 2010, have fallen 89% in real terms to $137/kWh in 2020. By 2023, average prices will be close to $100/kWh, according to the latest forecast from research company BloombergNEF (BNEF).”
Of note, many electric buses in China use LFP battery chemistries, which are now making their way into electric cars.
Most notably, Tesla recently switched to LFP batteries in its Model 3 standard Range Plus produced in China.
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