August 13, 2024 – Groundbreaking research conducted by the Vehicle Technologies Office of the U.S. Department of Energy (DOE) has unveiled a staggering 90% reduction in the cost of electric vehicle (EV) batteries between 2008 and 2023, bolstering automakers’ efforts to bridge the price gap between EVs and internal combustion engine (ICE) vehicles.
The dimensions, weight, and cost of battery packs have emerged as pivotal factors in EV production. The relentless decline in battery costs over the years can be attributed to advancements in battery technology and chemistry, the adoption of novel manufacturing processes, and a remarkable surge in production volumes.
According to the DOE data, the cost of lithium-ion battery packs has plummeted from 1,415perkilowatt−hour(kWh)in2008tojust139/kWh in 2023. Notably, the period between 2009 and 2013 witnessed the most dramatic cost reductions.
Focusing on light-duty vehicles with annual production volumes exceeding 100,000 units, the study highlights the transformation in battery economics. Taking Tesla’s Model Y as a case study, its 81 kWh battery pack, which cost a whopping 114,615in2008,nowretailsatamere11,259 in 2023.
Automakers anticipate a sustained downward trajectory for battery costs in the coming years, paving the way for the mass production of economically viable EVs. Market research firm Gartner forecasts that by 2027, the production costs of EVs will undercut those of ICE vehicles. Many in the industry predict cost parity between the two vehicle types by the end of this decade.
This cost reduction, coupled with lower suggested retail prices, stands to deliver significant savings to EV consumers, particularly when considering the total cost of ownership over the vehicle’s lifetime. A recent J.D. Power study underscores this point, revealing that in 48 out of 50 U.S. states, the five-year total cost of EV ownership already surpasses that of ICE vehicles.
The ongoing transformation underscores the dynamic nature of the automotive landscape, where technological breakthroughs and economies of scale are reshaping the economics of personal mobility. As battery costs continue to decline, the future of sustainable transportation looks increasingly promising.
