Incredible growth of Li-Ion batteries at reduced cost

The Li-ion battery market has shown tremendous growth the last decade. Between 2010 and 2018 the average growth in USD was 9% per year, and it is expected to continue at 7-9% until 2030. The Li-ion battery development is even more impressive. The energy storage capacity produced in 2018 was almost 160 GWh, compared to less than 25 GWh in 2010. According to the consulting firm Avicenne, the expected compound annual volume (in GWh) growth rate to 2030 is 23-26%. These predictions are conservative compared to what other companies and organizations anticipate, but still forecast  double the annual volume produced every 3-4 years.

In connection to the rapid li-ion battery development in the industry, there has been a significant reduction in Li-ion battery cost ($/kWh). The lower prices are largely achieved by economies of scale but also because of the increased energy density resulting in more watt-hour storage capacity for each individual cell. The volume weighted average battery pack price was $1160 in 2010 but only $156/kWh in 2019. The development in the 2010’s is illustrated in the figure below, showing average battery pack cost as a function of the annual volume produced in GWh. The volume weighted average Li-ion battery cost decreased exponentially as the annual Li-ion battery production volume increased, and the batteries are expected to continue to become more and more affordable.

Volume weighted average battery pack cost
Volume-weighted average li ion battery cost and annual volume produced during the 2010s

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Lithium-Ion batteries for the 2020s

Although there is a consensus that average li ion battery cost will continue to fall, there is a  wide range in the predictions of future battery prices. Some predict that the average battery pack price will be around 100 $/kWh in 2023, based on extrapolation of historical data and future volume estimations. Others argue that extrapolation of historical evolution of li ion battery prices and volumes is not representative of future development. The argument is that large price reductions can be expected in the cell and li ion battery development and production due to economies of scale, but that cost reductions for mining raw materials and material processing will be smaller as those industries are more mature. A two stage model is proposed, where raw material prices limit how low battery prices may become. The predicted average EV battery pack cost is then around $124/kWh in 2030 and ranging from $93/kWh to $140/kWh. Indeed, raw market analysis predict a structural deficit of key materials for li ion battery development in the mid 2020’s. The reason is a shortage in mining and refining capabilities rather than a geological shortage. Possibly, future EV battery may vary and price will end up between these predictions at around $125/kWh in 2025 as yet others predict. These different forecasts are summarized in the following figure.

Volume weighted average cost of a Li-ion battery pack in 2019 and forecasts from different sources.
Volume-weighted average cost for a lithium-ion battery in 2019 and forecasts from various sources.

In conclusion, Li-ion batteries are reaching levels where they become very interesting for stationary energy storage systems. Li-ion battery development is already known to be better than lead-acid in terms of energy storage capacity and lifetime, and below $150/kWh Li-ion are also becoming very interesting from purchase price point of view. Whether or not the battery prices will meet the European car manufacturers target of €70/kWh for EV’s and €100/kWh by 2030 is still an open question.

All sources for figures and other data mentioned in this article are to be found in the reference list in our white paper "Lithium-Ion batteries for the 2020's".

If you want to read more about battery safety, the working principles of Li-Ion batteries, their historical background, their incredible growth at reduced cost, how much energy density has increased and get the latest outlook for this technology, download our comprehensive white paper “Lithium-Ion batteries for the 2020’s” written by our experts.

Etteplan Anton Nytén

Anton Nytén

Technology Director, Battery Technology
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