Electric cars closing in on gas guzzlers as battery costs plunge

Electric vehicle charging port in Chicago Image: Guy West/Flickr

Electric vehicles may cost about the same as their gas-guzzling brethren in just three or four years – and only get cheaper from there, according to a new report from BloombergNEF.

Electric cars and buses, which are key to fighting global warming, have long been saddled with bigger up-front costs than those burning gasoline or diesel, due to the cost of batteries. But researchers say that price premium will disappear once battery packs reach $100 per kilowatt-hour – a tipping point BNEF expects to occur in 2023, according to its 2020 Battery Price Survey.

Battery costs have plunged nearly 90 per cent in the last decade, from $1,100 per kilowatt-hour in 2010 to $137 this year. Packs built for cars – as opposed to home solar arrays or pieces of the power grid – cost even less. They now average $126 per kilowatt-hour.

BNEF’s annual survey also found examples of batteries for electric buses in China selling below $100 per kilowatt-hour, said lead author James Frith. China’s average pack price for electric buses is only slightly higher, at $105.

“Within just a few years we will see the average price in the industry pass this point,” said Frith, BNEF’s head of energy storage research, in a press release. “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.”

BNEF forecasts prices dropping to $58 per kilowatt-hour by 2030. One possible way that price could be achieved is the widespread production of solid-state batteries, which BNEF estimates could be made for 40 per cent the cost of current lithium-ion batteries.

© 2020 Bloomberg L.P.

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