Thursday, January 2, 2025

New figures: The weakness of electric cars has halved in price in 4 years

Right now, the battery is one of the things that keeps most drivers from buying an electric car. But that may change over the next four years, new figures from Goldman Sachs show.

According to a new analysis from Goldman Sachs, electric car batteries are not only getting cheaper, but they will also undergo significant price drops in the coming years.

Already this year, the prices of electric car batteries have fallen by 25 percent compared to last year. Forecasts indicate that the average price per kilowatt-hour will hit $111 by the end of the year, but still remain above the crucial $100 level.

Analysts from Goldman Sachs expect the price pressure on batteries to continue. Within the next two years, prices are expected to fall by a further 28 percent.

Which means that battery prices will be halved within four years. According to the analysis, this will lead to electric cars becoming as economically advantageous as traditional petrol-powered cars – even without government subsidies.

– There are two main reasons for the price drop. The first is technological progress.

READ ALSO: Danish car company hit by hacker attack

– We are seeing more new battery products that have 30 percent higher energy density and lower costs, explains Nikhil Bhandari, co-head of Goldman Sachs Research's Asia-Pacific Natural Resources and Clean Energy Research.

The second reason is falling prices for the metals used in the production of batteries. Lithium and cobalt, which account for around 60 percent of the cost of battery production, have seen significant price drops.

– About 40 percent of the future price decline can be attributed to lower raw material costs, especially after the high levels from 2020 to 2023, adds Bhandari.

The battery suppliers have also optimized their production by building battery packs directly from and from single cells, reducing costs. On the other hand, the packages themselves become more complicated to repair.

It is especially LFP batteries that use fewer rare metals that are gaining market share. It happens i.a. in China, where the technology is expected to soon account for 40 percent of the electric car market.

However, NMC batteries, based on nickel and cobalt, continue to dominate globally.

This development is a challenge for new actors such as Swedish Northvolt, which faces severe price pressure. However, the company managed to pay a gigantic tax debt last week and thus avoid bankruptcy. Read more about it here.

– It takes about 10 years from the start of research and development to production, and many companies struggle to become competitive in time, notes Bhandari.

Read more exciting news from and about the world of cars right here!

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