Battery Prices Continue to Fall Leading to Increased EV Sales

What Happened?

The price of electric vehicle batteries has continued to fall.

This year has seen the sharpest decrease since 2017.

Reductions in battery prices have contributed to a corresponding drop in the cost of electric vehicles themselves. This in turn has fueled an increase in sales for electric vehicles globally.

According to the International Energy Agency, global sales for electric vehicles nearly reached 14 million for 2023. This is equal to one in five total automobiles sold worldwide, representing a 35% increase from 2022.

Global sales of electric vehicles were concentrated in three primary markets, China, Europe, and the United States. 

Why it Matters

The decrease in the prices of electric vehicle batteries is being driven by an increase in production in the number, type, and quality of batteries and vehicles themselves.

China is the current leader in electric vehicle battery production. According to Bloomberg, ‘China alone is expected to produce enough battery cells to meet 92% of total global demand of 1.2 terawatt-hours for EV and stationary storage segments in 2024, which has exerted downward pressure on battery prices.’ 

China also leads the world in electric vehicle sales, accounting for nearly two-thirds of all global sales in 2023. Europe and the United States account for most of the remainder of the market.

Electric vehicle manufacturers in Europe and the United States are trying to catch up, meaning the number and quality of electric vehicles being produced is likely to continue to increase in 2025. 

Broad efforts by manufacturers are likely to continue to reduce the overall costs of electric vehicle batteries. Bloomberg’s Annual Battery Price Survey projected that battery prices could fall below $100 per kilowatt hour as soon as 2026.

This is significant because that is the point at which electric vehicles would reach price parity with internal combustion vehicles in terms of energy use.

How it Affects You

China is a major exporter of electric vehicles, and the incoming Trump administration has threatened to impose steep tariffs on Chinese imports.

With American manufacturers of electric vehicles competing for the same market, tariffs could help them compete with otherwise cheaper Chinese imports.

As the prices of electric vehicle batteries have continued to decrease, the range and capability of those batteries have continued to grow. A major drawback to early electric vehicles was a limited range.

But new batteries entering the market in 2024 promise a range of up to 450 miles on a single charge. That’s a significant improvement over the current average range of 300 miles.

The decreasing cost to buyers, increasing production, and growing demand point to increasing growth in the electric vehicle market globally for 2025.

That can only be good news for consumers.