Effect of Higher Battery Costs

Effect of Higher Battery Costs

For the past several years the forecast for the cost of Li-ion batteries has been to come down to around $80/kWh, at which point battery-powered vehicles would be competitive with ICE vehicles.

However, it now appears batteries will never achieve the targeted cost of $80/kWh.

Here is a chart from BloombergNEF showing the trend in battery costs.


it’s very possible that the low point was in 2021, and that the cost of batteries will increase from this point forward.

The cost of materials is the driving force behind the increase in battery costs.

Could changing the materials used in a battery cut Li-ion battery costs?

Lithium-iron phosphate (LFP) battery cells, made by China’s Contemporary Amperex Technology company is one possibility. Ford is building a plant in Michigan, using CATL’s technology for LFP batteries. 

LFP batteries, however, have lower energy density, i.e. less range and more need for charging, and are less suitable for cold weather, already a problem with regular Lithium-ion batteries.

While many say that LFP batteries will cost less, a search of the literature cannot find any recent, specific estimate for the cost of an LFP battery.

A 20% reduction in cost would be significant, so on that basis, the current estimated cost for an LFP battery would be $120/kWh, which is still above the cost where BEVs would be competitive with ICE vehicles.

While the LFP battery avoids using nickel and cobalt it still uses other materials, including lithium and graphite.

And, as already shown, the number of graphite mines will have to increase substantially. 

LFP batteries will not, therefore, be immune from material cost increases.

LFP powered BEVs already represent 40% of the market in China, but travel distances are routinely much lower than in the United States. European travel distances are similar to China’s making adoption of the LFP battery in Europe more likely.

However, the extent that LFPs will penetrate the US market is unclear.

What is clear, is that increasing material costs will drive the cost of BEVs ever higher. 

Is it fair to conclude that BEVs will never be cost competitive with ICE vehicles?

The book, Clean Energy Crisis, has a complete analysis of the many materials used in Lithium-ion batteries.

The high cost of BEVs is already affecting purchasing decisions by other than the rich and famous, or car aficionados. 

At what point does the price of a BEV become prohibitive for the average American? 

And how will the average American respond to the government’s outlawing of ICE vehicles?


Let others know about this article by using this link in an email bit.ly/3EomTr6 

. . .



Please follow and like us:

3 Replies to “Effect of Higher Battery Costs”

  1. Excellent information. Looks like $80/kWh is wishful thinking just as much as man-made climate change is wishful thinking. I’m sticking with my ICE cars — economical, reliable, and they produce CO2, which plants love.