Battery prices plummet in China, same will happen in Europe

Lower raw material costs and the use of LFP chemistry are making zero-emission cars more affordable.

CATL au salon de l'automobile de Shanghai

By: Francesco Barontini

Published by: Brian Potter

Jul 22, 2024 at 5:00am ET

Add Motor1.com as a preferred source in Google

Comment

On paper, the electric car's recipe for success is simple: to sell, a battery-powered car has to be economically competitive with its petrol-powered competitor, and to do that, batteries have to cost less and less.

The good news is that this is indeed the case. According to a report published by Bloomberg, the cost of a lithium-iron-phosphate battery will be 51% lower in 2024 than in 2023. This is at least what has happened in China, where lithium-iron-phosphate cells have an average price of $53/kWh, compared with $95/kWh previously.

Falling prices and demand

The main reason why the price of LFP batteries in China has fallen so much is that the cost of the raw materials used for the cathode, which is the most expensive component of a battery, has been reduced. At the beginning of 2024, it cost 50% less than the previous year. Today, it is only 30%.

A second factor has also driven down the price of batteries: demand. Chinese Gigafactories produced 51% of their maximum battery capacity in 2022. By 2023, this had fallen to 43%. This is because demand for electric cars around the world has fallen, and the drop in demand is forcing manufacturers to revise prices downwards.

Zeekr Golden Brick bBattery LFP

Zeekr Golden Brick: Geely's battery with LFP chemistry

Price parity is close everywhere

In terms of batteries as a whole, it is currently calculated that a battery with LFP chemistry costs an average of $75/kWh. In fact, electric cars equipped with this technology have already reached price parity with combustion engine cars. In fact, two-thirds of zero-emission vehicles sold in China cost less than their petrol counterparts.

What do you think?

View

Comments

But that's what's happening in the Land of the Dragon. In the rest of the world, where conditions and technologies are different, LFP batteries are much less common than nickel-manganese-cobalt.

Production of BYD Blade batteries

BYD's Blade battery features LFP chemistry

However, China is showing a way forward that will also be followed by other markets, led by the US and Europe. In fact, analysts believe that raw material prices will remain low for a long time, leading battery manufacturers to bring increasingly affordable products to market. This will lead to increased demand for electric cars in the future, triggering a virtuous mechanism in which economies of scale and greater sharing of components will contribute to the spread of new mobility.

Gallery: CATL at the Shanghai Motor Show 2023

CATL at the Shanghai Motor Show

We want your opinion!

What would you like to see on Motor1.com?

Take our 3 minute survey.

- The Motor1.com Team

Share this Story

GO TO COMMENTS

(

)

Got a tip for us? Email: tips@motor1.com

View all comments ( )

Popular

Bugatti Restores One-Off Veyron With A Mirror-Like Aluminum Body

BMW Kept This Hatchback A Secret For Decades

Skoda Wants You To 3D Print Pieces Of Your Car At Home

The Gas BMW M3 Isn't Dead: Next-Gen Prototype Roars