- 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
EV Batteries Will Be Half Their 2023 Prices In Three Years: Study
A recent study conducted by a team of experts in the field of electric vehicle (EV) technology has found that the cost of EV batteries is expected to decrease significantly over the next three years. According to the study, which was published in a leading scientific journal, EV batteries will be half their 2023 prices by the year 2025.
The study, which analyzed data from leading battery manufacturers and EV companies, found that advancements in battery technology and manufacturing processes are driving down the cost of EV batteries at a rapid pace. This, in turn, is expected to make EVs more affordable for consumers and increase their adoption rate in the coming years.
One of the key factors driving the decrease in battery prices is the growing demand for EVs globally. As more countries and cities implement policies to reduce greenhouse gas emissions and combat climate change, the demand for electric vehicles is expected to continue to rise. This increased demand is leading to economies of scale in battery production, which is lowering the overall cost of batteries.
In addition to economies of scale, technological advancements in battery chemistry and design are also contributing to the decrease in battery prices. New materials and processes are being developed that are more efficient and cost-effective, leading to lower production costs and ultimately lower prices for consumers.
The study also found that government incentives and subsidies for EVs are playing a significant role in driving down the cost of batteries. Many countries around the world offer financial incentives for consumers to purchase EVs, which helps to offset the higher upfront cost of these vehicles. These incentives are encouraging more consumers to make the switch to electric vehicles, which in turn is driving down the cost of batteries.
Overall, the findings of this study are promising for the future of electric vehicles. As battery prices continue to decrease, EVs will become more affordable for consumers, leading to increased adoption rates and a reduction in greenhouse gas emissions. With continued advancements in battery technology and government support for EVs, the future of electric vehicles looks bright.