Global research institution IHS Markit published their latest analysis stating that the average cost of a Li-ion battery cell will fall below US$ 100 per kWh in the next three years.
From 2012-2020, the average cost of a Li-ion battery has already fallen by 82%. By 2023, the cost of a battery will have declined by a total 86% (by US$ 580/kWh) compared to the early 2010s. Costs are expected to decline even further to as low as US$ 73/kWh in 2030.
“Progress in growing the share of low-carbon generation, such as solar and wind, in the global power mix also brings a particular set of challenges—namely intermittency,” said Sam Wilkinson, associate director, clean technology and renewables, IHS Markit. “Improving cost-effectiveness of energy storage, particularly batteries, will be key to providing needed flexibility to balance this supply of electricity with demand.”
The biggest contributor to falling battery cell costs are expected to be the reductions in manufacturing costs through larger factory sizes and improving economies of scale. Reductions in material costs by improving efficiencies and adopting lower cost cathode compositions, and improvements in battery energy density are also expected to play a role.
Among the three major Li-ion battery cells — Nickel Manganese Cobalt (NMC), Nickel Cobalt Aluminum (NCA) and Iron Phosphate (LFP) — LFP has already fallen below the US$ 100/kWh threshold in 2020 with all three types expected to be below the US$ 100 mark by 2024. LFP will remain the lowest cost option throughout the next ten years while NMC and NCA will continue to command a majority share of the automotive and transport sector.
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