Battery prices experienced turbulence in 2022, mainly reflected in rising prices of raw materials and components, and then resumed their decline this year. The agency expects battery prices to continue falling in the coming years and updated its short-term outlook to reflect dramatically changed commodity prices and expectations this year, particularly for lithium carbonate and lithium hydroxide.
Raw material, component and battery prices fell in 2023 due to capacity expansion across the battery value chain and slower than expected demand growth. These dynamics have led the industry to lower price expectations for most battery commodities compared to last year.
With the expected decline in raw material prices, battery prices should also gradually decline. Improvements in materials processing and manufacturing, as well as changes in the anode and cathode material systems used, will help lower the capacity-weighted average price of batteries.
Based on its lithium-ion battery price survey, the agency predicts that battery pack prices will fall to US$133/kWh next year (based on the actual exchange rate of US dollars in 2023), a US$6/kWh drop from 2023. Battery pack prices are expected to fall to $130/kWh in 2025 and $127/kWh in 2026.
The past few years have shown that battery prices won't always follow a simple downward trajectory. There can be bumps along the way due to input costs or supply and demand dynamics. Reducing battery costs is key to lowering the cost of new energy vehicles and stationary energy storage, but this requires continued investment in capacity expansion, R&D and manufacturing process improvements.