Electric vehicles

After a decade of declines, battery prices will increase in 2022, top analysts say

But prices could begin dropping again in 2023 or 2024.
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Francis Scialabba

· 6 min read

After more than a decade of declines in cost, the most expensive component of electric vehicles is getting pricier.

The average price of a lithium-ion battery pack has dropped nearly 90% from 2010 to 2020. Last year, that cost fell to $132 per kilowatt-hour, according to BloombergNEF, but the decrease was smaller than expected.

This year will be the first time the average battery price goes up, experts told us, although estimates vary for exactly how much battery prices will rise by the end of this year. Benchmark Mineral Intelligence expects about a 10% rise this year, while Wood Mackenzie expects a jump of ~20% year over year, per preliminary estimates each firm shared with Emerging Tech Brew.

“We have 100% certainty that they have risen at this stage,” Yayoi Sekine, head of energy storage at BloombergNEF, told us. “Average pack prices could rise to $135/kWh in 2022.”

Even with this rise in battery prices, experts don’t expect to see much of an impact on the projected EV trends over the next 10 or 20 years.

“The actual metals, the volume of that available in the ground has not changed and the direction that the automotive industry and world governments are taking has not changed either,” Ram Chandrasekaran, head of road transport at Wood Mackenzie, told us. “It’s a significant increase, but…we don’t believe it changes the long-term trajectory of battery prices or electric-vehicle adoption.”

The near-term impact

Lithium-ion batteries make up at least 30% of the cost of an EV, and the raw materials used to build them have reached record-high prices over the last few months. The reversal of the battery-price trend is troubling for electrification efforts because the EV industry is working toward cost parity with gas-powered vehicles, and batteries play a major role in that equation.

Reaching relative affordability won’t be possible until EV batteries hit $100/kWh, some experts say. Last year, BloombergNEF estimated that the average price for battery packs would fall to $92/kWh by 2024, but intensifying supply-chain strains make that forecast seem increasingly unlikely.

Now it could be two additional years before battery prices fall below $100/kWh, Sekine said.

Rising costs are also having an outsized effect on companies making stationary storage batteries. These energy storage system (ESS) suppliers typically use less-expensive battery chemistries than auto suppliers, but they are now facing lithium prices that have shot up 500% since last year, according to Caspar Rawles, chief data officer at Benchmark Mineral Intelligence.

“With ESS, it’s quite a tight-margin business,” he told Emerging Tech Brew. “They’re now exposed to the swing in lithium prices, and it’s been more considerable in terms of the percentage change of cost for LFP than it has for NMC.”

Price pressures

One reason batteries are getting more expensive is that the cost of battery materials, particularly lithium, nickel, and cobalt, skyrocketed beginning in late 2021.

This is having a significant impact today because as manufacturing efficiencies increase and the cost of production decreases, materials costs begin to make up more and more of the total. Anode and cathode materials together can account for as much as 70% of the overall battery cost today, Rawles said.


While there isn’t a shortage of these critical metals, constraints on the markets are leading to higher mining costs, which are then passed on to battery makers. Other factors like the war in Ukraine and sanctions on Russia, which is a major class-one nickel supplier, have contributed to an even “tighter squeeze” over the last month, Sekine said.

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Increasing the supply of these battery materials could ease costs, but that will take time. Expanding an existing mine can take two or three years and opening a new operation takes about five to seven years, if all goes well, she said.

“The industry is scaling very rapidly, and so that means you have to bring a lot of mining capacity online, and to explore mines, that takes years,” Sekine said. “So it’s just more about the timeframes related to that.”

Ongoing supply-chain and logistics disruptions are also playing a role in the price trends, Sekine said.

The US is focused on how to increase the domestic supply of these battery materials. At the end of March, President Biden invoked the Defense Protection Act to provide federal support to increased mining of critical minerals as a matter of national security amid the energy transition. He named lithium, nickel, cobalt, graphite, and manganese specifically.

“Beyond costs, there is a very strategic push, especially in the US, toward securing supply chains,” Sekine said. “I think it’s as yet unclear how much mining capacity can be enabled through it, so that’s what we’ll be looking for.”

Brine pools at a lithium mine

Brine pools at a lithium mine. (Bloomberg Creative/Getty Images)

Looking ahead…

BloombergNEF doesn’t expect this cost trend to last long. Battery prices could begin to decline again at the end of 2023, leading to an overall decrease in prices for the year, Sekine said.

“That’s related to the fact that we know that there’s going to be additional nickel capacity coming online by the end of this year in Indonesia. We know that there’s some mines that are bringing lithium capacity online in Australia and Chile,” she said.

Other estimates predict that prices won’t begin to drop until 2024.

For consumers, higher battery costs could—along with other issues like inflation and supply-chain challenges—equal more expensive EVs in the near term. Automakers like Rivian and Tesla have announced price increases in the last few months, citing the rise in raw materials and logistics costs.

It’s still unclear just how much of a chilling effect these higher price tags might have on EV adoption after a record year of EV sales in 2021.

Global EV sales doubled last year compared with 2020, to 6.6+ million vehicles, and Wood Mackenzie predicts that number will grow to about 9.3 million this year, despite any battery price increases.

“Is $1,000, $2,000, $5,000 more expensive, something that consumers are willing to pay for? We don’t fully know the answer to that right now. My personal experience is that for entry-level vehicles, probably highly sensitive. For luxury vehicles, probably not as much,” Sekine said.

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