EV battery prices set to fall 50% by 2026
Technology advances that have allowed EV battery makers to increase energy density together with a drop in green metal prices will push battery prices even lower, according to Goldman Sachs Research.
Electric vehicle (EV) battery prices are expected to fall by almost 50% by 2026, according to Goldman Sachs Research.
The global average prices declined from USD 153 per kilowatt-hour (kWh) in 2022 to USD 149 in 2023, and they’re projected to fall to USD 111 by the close of this year, the company has summarized in an article.
“Our researchers forecast that average battery prices could fall towards $80/kWh by 2026, amounting to a drop of almost 50% from 2023, a level at which battery electric vehicles would achieve ownership cost parity with gasoline-fueled cars in the US on an unsubsidized basis,” Goldman Sachs said.
Technology advances that have allowed EV battery makers to increase energy density together with a drop in green metal prices will push battery prices lower than previously expected, according to Goldman Sachs Research.
New battery products have been launched recently that feature about 30% higher energy density and lower costs. Part of these improvements include eliminating cell modules and moving to a cell-to-pack battery that helps to save space inside, and cutting costs with a simplified infrastructure.
Secondly, battery metal prices — including those of lithium and cobalt — are steadily declining. Metals are about 60% of the cost of batteries. About 40% of the decline is coming from lower commodity costs, and it is expected to continue through 2030.
“Admittedly, that leaves near-term EV battery demand more dependent on regulations, especially next year,” says Nikhil Bhandari, co-head of Goldman Sachs Research’s Asia-Pacific natural resources and clean energy research. “But we think we’re going to see a strong comeback in demand in 2026 purely from an economics perspective. We believe 2026 is when a consumer-led adoption phase will largely begin.”
The next big thing is solid-state batteries.
“In the future, we’ll be talking about solid state batteries, which could be a real game changer, because the technology can increase your energy density more materially and is slightly safer because there is no flammable liquid electrolyte,” Bhandari said. “We were assuming that newer batteries like solid state would capture about 5-10% of the market along with sodium ion batteries, but that hasn’t happened.
