Lithium-ion battery pack prices increase due to rising costs of materials and components
Lithium-ion battery pack prices increase due to rising costs of materials and components

Lithium-ion battery pack prices increase due to rising costs of materials and components

BloombergNEF (BNEF) has noticed that raw material and battery component prices have been rising steadily since it began tracking the market in 2010, aided by soaring inflation, and this has now led to the first-ever increase in lithium-ion battery pack prices over that time period.


After more than a decade of declines, volume-weighted average prices for lithium-ion battery packs across all sectors have increased to $151/kWh in 2022, a 7 percent rise from last year in real terms. The upward cost pressure on batteries outpaced the higher adoption of lower-cost chemistries like lithium iron phosphate (LFP). BloombergNEF expects prices to stay at similar levels next year, further defying historical trends.

The above figures represent an average across multiple battery end-uses, including different types of electric vehicles, buses, and stationary storage projects. For battery electric vehicle (BEV) packs, in particular, prices were $138/kWh on a volume-weighted average basis in 2022. At the cell level, average BEV prices were just $115/kWh. This indicates that on average, cells account for 83 percent of the total pack price. Over the last three years, the cell-to-pack cost ratio has diverged from the traditional 70:30 split. This is partially due to changes to pack design, such as the introduction of cell-to-pack approaches, which have helped reduce costs.

On a regional basis, battery pack prices were cheapest in China, at $127/kWh. Packs in the US and Europe were 24 percent and 33 percent higher, respectively. Higher prices reflect the relative immaturity of these markets, the higher production costs, the diverse range of applications, and battery imports. For the higher end of the range, low volume and bespoke orders push prices up. 

Prices could have risen further in 2022 had it not been for the higher adoption of the low-cost cathode chemistry known as LFP, and the continued reduction of expensive cobalt in nickel-base cathodes. On average, LFP cells were 20 percent cheaper than lithium nickel manganese cobalt oxide (NMC) cells in 2022. However, even low-cost chemistries like LFP, which is particularly exposed to lithium carbonate prices, have felt the bite of rising costs throughout the supply chain. LFP battery pack prices rose 27 percent in 2022, compared to 2021.

“Raw material and component price increases have been the biggest contributors to the higher cell prices observed in 2022,” said Evelina Stoikou, an energy storage associate at BNEF and lead author of the report. “Amidst these price increases for battery metals, large battery manufacturers and automakers have turned to more aggressive strategies to hedge against volatility, including direct investments in mining and refining projects.”

While prices for key battery metals like lithium, nickel, and cobalt have moderated slightly in recent months, BNEF expects average battery pack prices to remain elevated in 2023 at $152/kWh (in real 2022 dollars).

BNEF expects battery prices to start dropping again in 2024 when lithium prices are expected to ease as more extraction and refining capacity comes online. Based on the updated observed learning rate, BNEF’s 2022 Battery Price Survey predicts that average pack prices should fall below $100/kWh by 2026. This is two years later than previously expected and will negatively impact the ability of automakers to produce and sell mass-market EVs in areas without subsidies or other forms of support. Higher battery prices could also hurt the economics of energy storage projects.

“Despite a setback on price declines, battery demand is still reaching new records each year” added Yayoi Sekine, head of energy storage at BNEF. “Demand will reach 603GWh in 2022, which is almost double that in 2021. Scaling up supply at that rate of growth is a real challenge for the industry, but investment in the sector is also rising rapidly and technology innovation is not slowing down.”

Kwasi Ampofo, head of metals and mining at BloombergNEF, said that lithium prices remain high due to persistent supply chain constraints and the slow ramp-up in new production capacity.

“Additional lithium supply could ease the pressure on prices in 2024, while geopolitics and trade tension remains the biggest uncertainties for other key battery metal prices in the short term” added Mr. Ampofo. “Resolving these tensions could help calm prices in 2023 and beyond.”

Continued investment in R&D, manufacturing process improvements, and capacity expansion across the supply chain will help to improve battery technology and reduce costs over the next decade. BloombergNEF expects next-generation technologies, such as silicon and lithium metal anodes, solid-state electrolytes, and new cathode material and cell manufacturing processes, to play an important role in enabling further price reductions.

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