Lithium-ion battery pack prices have experienced their largest annual decline since 2017, dropping 20% from 2023 to a record low of $115 per kilowatt-hour, according to analysis from research provider BloombergNEF (BNEF). This significant decrease is attributed to several factors, including manufacturing overcapacity, economies of scale, lower prices for metals and components, the adoption of less expensive lithium-iron-phosphate (LFP) batteries, and a slowdown in the growth of electric vehicle (EV) sales.
Over the past two years, battery manufacturers have aggressively expanded production capacity in anticipation of surging demand from the EV and stationary storage sectors. As a result, global battery-cell manufacturing capacity has reached 3.1 terawatt-hours, more than 2.5 times the annual demand for lithium-ion batteries in 2024, according to BNEF. While demand across all sectors saw year-over-year growth, the EV market—the primary driver of battery demand—expanded more slowly than in previous years. In contrast, stationary storage markets have taken off, with strong competition among cell and system providers, especially in China.
“The price drop for battery cells this year was greater compared with that seen in battery metal prices, indicating that margins for battery manufacturers are being squeezed,” said Evelina Stoikou, head of BNEF’s battery technology team and lead author of the report. “Smaller manufacturers face particular pressure to lower cell prices to fight for market share.”
Battery pack prices vary by region and application. In China, average battery pack prices were the lowest at $94/kWh. In the United States and Europe, prices were 31% and 48% higher, respectively, reflecting the relative immaturity of these markets, higher production costs, and lower volumes. The larger price differences compared to previous years suggest the price decline was more pronounced in China. Intense competition there has led to falling battery prices and tighter margins, prompting many manufacturers to explore new markets, including energy storage and overseas opportunities.
Prices for battery electric vehicles (BEVs) averaged $97/kWh, crossing below the $100/kWh threshold for the first time. While EVs have reached price parity with combustion vehicles in China, they remain more expensive in many other markets. BNEF expects more segments to achieve price parity in the coming years as lower-cost batteries become more widely available outside of China.
Looking ahead, BNEF projects that battery pack prices will decrease by an additional $3/kWh in 2025. Continued investment in research and development, manufacturing process improvements, and capacity expansion across the supply chain are expected to enhance battery technology and further reduce prices over the next decade. Next-generation technologies—such as silicon and lithium metal anodes, solid-state electrolytes, new cathode materials, and innovative cell-manufacturing processes—will play an important role in enabling future price reductions.
Source: BloombergNEF
