- Researchers at Goldman Sachs expect lithium-ion battery pack prices to fall to $82 per kilowatt-hour by 2026.
- That would make EVs cost the same as gas cars in the U.S. on a total cost of ownership basis, Goldman says.
- Better technology and lower input costs are driving the sliding prices.
Making electric cars cheaper to buy and own is key to driving the industry’s growth. Because most Americans aren’t going to ditch their familiar gas-powered cars out of the goodness of their hearts or a soft spot for the climate.
For that to happen, batteries need to get cheaper. Some good news on that front: Lithium-ion battery prices will continue dropping fast over the next few years, according to research out this week from Goldman Sachs.
The bank’s researchers forecast that global average battery pack prices will drop to $82 per kilowatt-hour (kWh) by 2026. That’s roughly half of what batteries cost in 2023 ($149/kWh). And it’s a steep 26% drop from this year’s prices, too.
The researchers project that battery costs will fall to $111/kWh by the close of 2024. To really drive home the direction things are headed here, I’ll add that these same batteries cost $780/kWh in 2013.
Goldman Sachs says the projected 2026 prices unlock a key milestone in the U.S. That’s “a level at which battery electric vehicles would achieve ownership cost parity with gasoline-fueled cars in the US on an unsubsidized basis.” Today, the average new electric car costs significantly more than a gas equivalent, although that can be offset by lower fueling and maintenance costs for EVs.
To be sure, new models like the $35,000 Chevy Equinox EV—which has over 300 miles of range—are helping. But that’s far from the norm. And traditional car companies are still struggling to turn a profit on EVs, in part due to high battery costs and low production volumes. Purchase incentives like the $7,500 EV tax credit also help both consumers and automakers, but they can’t support sales indefinitely. For EVs to really take off, buying one will need to be an obvious choice for people.
The Chevy Equinox EV is a standout in the affordable EV market.
Parity in total cost of ownership will help drive a strong rebound in EV demand in 2026, Goldman’s researchers say. That makes sense. New cars are already extraordinarily expensive right now, and high interest rates aren’t helping matters. Paying extra to own a new and unfamiliar technology is a hard sell for a lot of consumers. That’s a big reason for the slowdown in EV demand growth the U.S. is currently experiencing.
“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,” said Nikhil Bhandari, co-head of Goldman Sachs Research’s Asia-Pacific Natural Resources and Clean Energy Research, in the report.
According to Bhandari, there are two main drivers pushing battery prices down faster than expected. Technological innovation has allowed companies to produce batteries that can contain more energy at a lower cost. And costs of battery metals like lithium and cobalt are sliding. High demand for those metals and supply chain disruptions in recent years sent prices for both batteries and their raw materials skyrocketing. Now, as more mining and processing capacity comes online, prices are falling again.
Goldman expects a gradual decline in battery pack prices through 2030, which should be both a boon to EV manufacturers and to consumers. By the end of the decade, the researchers project global average battery pack prices will reach $64/kWh, roughly a third of their average price in 2019.
Contact the author: tim.levin@insideevs.com
A recent study has revealed promising news for the electric vehicle (EV) market, stating that the prices of EV batteries are expected to drop by half of their 2023 prices within the next three years. This projection could have significant implications for the mass adoption of electric vehicles and the transition to sustainable transportation.
The study, conducted by a team of researchers at a leading technology research firm, analyzed trends in battery technology, supply chain dynamics, and demand for EVs. The findings indicate that advancements in battery technology, increased production capacity, and economies of scale are all contributing factors to the projected price reduction.
Currently, one of the biggest barriers to widespread adoption of EVs is the high cost of batteries, which accounts for a significant portion of the overall cost of an electric vehicle. However, if prices continue to decline at the projected rate, EVs may become more affordable and competitive with traditional gasoline-powered vehicles.
The decrease in battery prices is likely to be driven by a combination of factors. Advances in battery chemistry and manufacturing processes are expected to increase energy density, reduce production costs, and improve overall performance. Additionally, the growing demand for EVs around the world is spurring investments in battery production capacity, leading to economies of scale that further drive down costs.
The implications of this trend extend beyond the EV market. As battery prices continue to decline, electric vehicles may become a more viable option for a broader range of consumers. This shift towards electric transportation could have significant environmental benefits, including reduced greenhouse gas emissions and improved air quality in urban areas.
While the study’s findings are encouraging, it is important to note that projections are subject to change based on a variety of factors, including technological advancements, policy decisions, and market dynamics. Nevertheless, the potential for EV batteries to be half their 2023 prices within the next three years represents a significant milestone in the transition towards sustainable transportation.
In conclusion, the projected decrease in EV battery prices is a positive development for the electric vehicle market. As prices continue to decline, electric vehicles may become a more accessible and appealing option for consumers. This shift towards sustainable transportation has the potential to have far-reaching benefits for the environment and society as a whole. It will be interesting to see how this trend unfolds in the coming years and the impact it will have on the automotive industry.