Study: Electric vehicle battery prices could drop by nearly 50% by 2026

According to foreign media reports, a new report released by Goldman Sachs shows that the price of electric vehicle batteries has been falling and the decline may be greater in the next two years.

The report shows that at the battery pack level, the average price of global batteries has dropped from $153 per kilowatt-hour in 2022 to $149 in 2023, and is expected to drop further to $80 per kilowatt-hour by 2026. According to analysts' estimates, this price has dropped by nearly 50% from 2023 and has surpassed the key node for electric vehicles to achieve parity with fuel vehicles.

Analysts believe that the continued decline in battery prices is mainly affected by two factors. One is technological progress, especially larger battery and battery pack technology, which can reduce or even completely eliminate battery modules. Analysts believe that this will not only help reduce costs, but also increase energy density by 30%, thereby effectively controlling the size of the battery pack. Tesla has begun production of its large-format 4680 batteries, but still faces challenges in reducing manufacturing costs.

Image source: Volkswagen

Another factor is the decline in prices for raw materials such as lithium and cobalt. Rising raw material prices caused a surge in electric vehicle battery costs in 2022, but the trend has now begun to decline and is expected to continue until at least 2030, accounting for about 40% of the expected decline in battery costs, according to Goldman Sachs.

Previously, in another report released earlier this year, Goldman Sachs predicted that the cost of electric vehicle batteries will drop by 40% between 2023 and 2025. Analysts believe that this trend will drive the growth of electric vehicle sales and predict that by 2030, electric vehicles may account for 50% of the US market.

Despite the supply chain issues brought on by the pandemic, the electric car era has kicked off with the advent of the Tesla Roadster more than a decade ago, and the price of electric car batteries has steadily fallen. Data released by the U.S. Department of Energy shows that battery prices have fallen by 90% compared to that time.