Falling Battery Prices Accelerate Electric Vehicle Adoption

Lithium-Ion Battery Export Price Drops 16% in a Year and a Half
Comparable to Internal Combustion Engine Cars Around 2026 Even Without Subsidies

A worker at the Octillion factory, an electric vehicle battery company in China, is working on the production line.

[Asia Economy Reporter Choi Dae-yeol] Battery prices, which account for a significant portion of electric vehicle (EV) costs, have been falling year by year. Over a decade ago, they made up more than half of the vehicle price, but recently, they are known to be around 20-30%.

According to market research firm BNEF, as of last year, the price per 1kWh of EV battery capacity was about $137, which is one-eighth of the price 10 years ago. In 2010, the same capacity cost around $1,100. Considering that the battery capacity of EVs released domestically is 70kWh and the price is around 50 million KRW, it is estimated to be slightly above 20%.

The export unit price is also clearly on a downward trend. Estimating from the domestic export volume and value of lithium-ion batteries, which are widely used for EV batteries, the price per ton dropped about 16% from $3.81 million in 2019 to $3.21 million this year. Last year, due to reduced EV demand caused by COVID-19, prices fell more than initially expected, and the downward trend has continued this year as EV demand increases.

It is important to combine various chemicals in a certain ratio to ensure safety and efficiency in batteries. Compared to the past, technology has improved, and as major cell makers have stabilized production and scaled up, unit costs have decreased. The slow adoption of EVs is attributed to insufficient charging infrastructure compared to internal combustion engines and still burdensome prices. As battery prices fall, the potential for EV adoption expands accordingly.

Jim Farley, CEO of Ford, is taking a photo in front of the company's electric pickup truck, the F-150 Lightning.

EV Battery Prices at One-Eighth of 10 Years Ago
Cost Reduction Through Technological Development and Economies of Scale
SK Battery Reveals Both Order Volume and Value... Increased Price Competitiveness

From two to three years from now, battery supply is expected to ease somewhat, so the downward price trend is likely to continue. This means EV adoption will accelerate. BNEF predicted that by 2023, battery prices will fall to around $100 per kWh. By 2026, prices are expected to reach about $80, enabling price competitiveness with internal combustion engine vehicles even without government subsidies.

EV batteries are assembled by grouping basic units called cells into modules and packs, which are then installed in vehicles. Prices vary depending on contract conditions such as the supply stage to automakers, contract partners, purchase quantities, and delivery periods. It is an industry norm that neither suppliers nor buyers disclose specific prices. Recently, SK Innovation attracted attention by simultaneously revealing both capacity and price of its battery order backlog.

At the Story Day event held on the 1st, the company announced that its recent order backlog is 1 TWh, valued at about 130 trillion KRW. Unlike domestic competitors, this company currently produces only EV batteries. LG Energy Solution and Samsung SDI also have significant shares in small secondary batteries used for home appliances and medium-to-large batteries used for energy storage systems (ESS). The industry viewed SK’s full disclosure of information that could roughly estimate the price of EV batteries it supplies with some surprise.

The Ford electric pickup truck F-150 Lightning, which uses SK batteries and is set to be released next year, starts at around $40,000 for the base model. Considering that Tesla’s Cybertruck and Rivian’s pickup truck using Samsung batteries, both launching next year, are priced just under $70,000, and GMC Hummer EV’s 2024 model exceeds $110,000, it is regarded as having price competitiveness among similar models launching next year.

This content was produced with the assistance of AI translation services.