CAN FALLING LI-ION PRICES BOOST EV SALES?

Lithium-ion battery prices, which constitute 40-60% of the manufacturing cost of EVs, have hit an all-time low. Automakers have slashed prices. But is it enough to propel the domestic EV market?

- ASTHA ORIEL

IN 2024 — two things happened: sales of electric vehicles declined and the price of lithium-ion batteries — which constitute about 40-60% of EV pricing — declined 90% from $1,400 per kilowatt hour in 2010 to $140 per kilowatt hour in 2023, according to the International Energy Association (IEA). While some see this trend as a blessing in disguise for global electric vehicle ecosystem, others are still in the ‘watch and wait’ phase, scrutinising how this trend would aid EV momentum.

Nonetheless, the sharp fall is viewed as a beacon of hope, at a time when global EV sales have fallen over the past few months. Back home, domestic automobile manufacturers are anticipating faster adoption of EVs, despite dismal sales, even as hybrids and CNG (compressed natural gas) have gained momentum.

With stiff competition, automakers globally are racing to price their EVs on par with the ICE (internal combustion engine) vehicles and other alternative fuel vehicles. In the U.S. and Europe — where competition has heated up owing to Elon Musk-led Tesla and Chinese EV makers such as BYD — automakers such as Stellantis, General Motors and Renault are in frenzy to introduce low-cost EV models by betting on reduction in lithium-ion battery prices and size.

In 2023, worldwide sales volume of batteries for EVs rose to an all-time high of over 750 gigawatt hours (GWh), reflecting a surge in EV uptake, according to IEA. “Today nearly one in five new cars sold is electric. Both bigger cars and range concerns have driven an increase in the average size of EV battery packs in recent years. Globally, the volume of batteries for electromobility has quadrupled over the past three years, with batteries for passenger light-duty vehicles (PLDVs) accounting for over 90% of this increase,” says IEA.

Domestic EV Makers Cut Prices