China Leads Global Drop in 2023 Lithium-Ion Battery Prices


Following significant fluctuations in battery prices in 2022, the latest research from BloombergNEF reveals a 14% decrease in the cost of lithium-ion battery packs in 2023, reaching a historic low of $139 per kilowatt-hour. The annual battery price survey released by the organization exposes a new trend in the battery market as prices continue to decline in 2023.

According to BloombergNEF data, the global demand for batteries in the electric vehicle (EV) and battery energy storage system (BESS) markets is projected to reach 950 gigawatt-hours in 2023, a 53% year-on-year increase. Despite the expected significant growth in battery demand, major battery manufacturers report a decline in factory utilization rates, with demand and revenue lower than anticipated. As a result, some companies are reassessing their production targets, impacting battery prices. Meanwhile, concerns about lithium prices remaining high, which peaked at the end of 2022, have largely subsided, and prices have once again fallen.

BloombergNEF energy storage analyst Evelina Stoikou states, “This year, battery prices continue to closely follow the trend of raw material prices. In many years of our research, price declines have been driven by scale and technological innovation, but this trend has changed. The reasons for this year’s price drop are the significant increase in production capacity at various points in the value chain, coupled with demand weaker than expected.”

These data cover various battery applications, including different types of electric vehicles, buses, and electrochemical energy storage projects. For pure electric vehicle battery packs, the capacity-weighted average price in 2023 is $128 per kilowatt-hour. At the cell level, the average price of pure electric vehicle cells is only $89 per kilowatt-hour, accounting for 78% of the average pack price. The increase in the proportion of cell costs is mainly due to battery pack design changes, such as the adoption of cost-effective module-free technology (CTP).

From a regional perspective, China has the lowest average battery pack price at $126 per kilowatt-hour, while the United States and Europe have battery pack prices 11% and 20% higher, respectively. This reflects China’s scale and technological advantages in battery manufacturing, as well as the relatively immature battery industry and higher production costs in the United States and Europe.

Furthermore, the electric vehicle and electrochemical energy storage industries are increasingly favoring lithium iron phosphate (LFP) batteries. The global weighted average prices for these battery packs and cells are $130 and $95 per kilowatt-hour, respectively. The study finds that the average price of LFP cells has dropped below $100 per kilowatt-hour for the first time, making lithium iron phosphate 32% cheaper than nickel-manganese-cobalt oxide (NMC) cells.

Interviewed mineral suppliers and metal traders expect the prices of key battery metals such as lithium, nickel, and cobalt to further decline in 2024. It is anticipated that the average battery pack price will once again decrease to $133 per kilowatt-hour next year. In the coming years, technological innovation and manufacturing process improvements will further drive down battery pack prices, with an expected drop to $113 per kilowatt-hour in 2025 and a sharp decline to $80 per kilowatt-hour by 2030.

BloombergNEF energy research director Yayoi Sekine states, “Battery prices have been on a roller coaster ride over the past two years. Large markets such as the United States and Europe are establishing local battery manufacturing capabilities, and we are closely monitoring how production incentives and tightening regulations on key minerals will affect battery prices. These localization efforts may add some complexity to the battery price trends in various regions in the coming years.” The trend of localization in the United States and Europe may increase pressure on battery pack prices, as manufacturing costs in these regions are higher compared to Asia.

Continued investment in research and development, improvements in manufacturing processes, and expansion of production capacity at all levels will contribute to advancing battery technology and reducing costs over the next decade. BloombergNEF predicts that next-generation technologies such as silicon and lithium metal anodes, solid-state electrolytes, new positive electrode materials, and cell manufacturing processes will play a crucial role in further reducing prices. As the battery industry continues to evolve, the market will face more changes and challenges.

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