China Leads Global Drop in 2023 Lithium-Ion Battery Prices

Prices Fall Despite Market Volatility

After sharp price swings in 2022, the cost of lithium-ion batteries dropped again in 2023. According to BloombergNEF’s latest annual survey, the average price of a battery pack fell 14% year-on-year to just $139 per kilowatt-hour, marking a historic low.

This trend reflects a new phase for the industry. While prices in past years were driven down mainly by technological innovation and economies of scale, 2023’s decline has been shaped more by surging production capacity and softer-than-expected demand.

Demand Grows, but Utilization Falls

BloombergNEF projects global battery demand for electric vehicles (EVs) and battery energy storage systems (BESS) will reach 950 GWh in 2023, representing a massive 53% increase compared with last year.

Yet, despite this growth, many major battery manufacturers are reporting lower utilization rates and revenue falling short of expectations. Several companies are even revisiting their production targets, adding more pressure on pricing.

At the same time, raw material prices have shifted. After peaking at the end of 2022, lithium prices have eased significantly, helping bring overall battery costs down.

Battery Pack and Cell Pricing

For pure EV battery packs, BloombergNEF’s data shows the capacity-weighted average price in 2023 is $128/kWh. At the cell level, the average is just $89/kWh, which represents about 78% of the pack’s total cost.

One reason for this higher proportion is the adoption of cell-to-pack (CTP) technology, which eliminates modules, reducing structural costs and improving efficiency.

Regional Price Differences

The survey highlights stark regional differences:

• China: lowest average battery pack price at $126/kWh
• United States: 11% higher than China
• Europe: 20% higher than China

China’s advantage comes from its scale, supply chain maturity, and advanced manufacturing processes, while higher costs in the U.S. and Europe reflect newer, less efficient production ecosystems.

Rise of Lithium Iron Phosphate (LFP)

Another major trend is the growing popularity of lithium iron phosphate (LFP) batteries in both EVs and energy storage. In 2023:

• LFP battery packs averaged $130/kWh
• LFP cells averaged $95/kWh

Notably, the price of LFP cells has dropped below $100/kWh for the first time, making them roughly 32% cheaper than NMC (nickel-manganese-cobalt) cells. This price gap is expected to further accelerate LFP adoption worldwide.

Future Price Outlook

Industry insiders, including mineral suppliers and traders, expect the cost of critical metals like lithium, nickel, and cobalt to fall further in 2024. BloombergNEF forecasts:

• 2024: pack prices down to $133/kWh
• 2025: further decline to $113/kWh
• 2030: sharp drop to around $80/kWh

These decreases will be supported by ongoing R&D investment, manufacturing improvements, and next-generation technologies, including silicon and lithium-metal anodes, solid-state electrolytes, and new cathode materials.

The Role of Localization

BloombergNEF energy research director Yayoi Sekine notes that battery prices have been on a “roller coaster ride” over the past two years. While Asia—especially China—remains the cost leader, the U.S. and Europe are accelerating local battery manufacturing through subsidies and stricter regulations on key minerals.

However, localization may raise costs in the short term, as production expenses in these regions remain higher than in Asia. The challenge will be balancing domestic production goals with the global trend of falling prices.

Looking Ahead

The battery industry is evolving rapidly, and the next decade will likely bring both price declines and technology breakthroughs. While regional policies may add complexity, the long-term outlook is clear: innovation, scaling, and supply chain efficiency will continue driving lithium-ion battery costs lower, reinforcing their role at the center of the global clean energy transition.