By Srikant Jayanthan, Senior Research Analyst, Supply Chain
and Technology, S&P Global Mobility
Lithium-ion (Li-ion) EV battery prices have decreased
dramatically over the past few years, mainly due to the fall in
prices of critical battery metals: Lithium, cobalt and nickel. For
example, the price of cobalt has fallen from roughly $70,000 per
metric ton in 2022 to about $30,000 in 2024.
Similarly, the price for lithium carbonate has fallen from a
high of approximately $70,000 per metric ton to well below $15,000
in 2024. This article focuses primarily on two of the most
sought-after Li-ion battery cathode chemistries in the automotive
industry today — NCM811 and lithium iron phosphate (LFP)
batteries.
Nickel cobalt manganese cells
The per kWh price of NCM811 cell is currently the lowest in
Greater China due to the low cost of battery materials, thanks to
high localization, and the price difference in the manufacturing
cost of these cells compared to Europe and North America.
However, S&P Global Mobility forecasts a more than 7% drop
in NCM811 cell prices in Europe between 2024 and 2030, falling at a
higher rate than Greater China. Nevertheless, the global average
price of NCM811 cell is expected to be marginally higher in the
second half of the decade compared with 2024.
“An upward adjustment in prices is anticipated in the coming
years, as some suppliers are currently selling their batteries with
minimal to no profit margin, which is financially unsustainable.
Additionally, another factor that could drive prices higher in the
medium term is the insufficient upstream battery supply chain
needed to support the growing regional industries,” said Hugo Cruz,
senior analyst, Battery Research at S&P Global Mobility.
Lithium iron phosphate cells
The price of LFP cells is over 20% lower than nickel cobalt
manganese (NCM) cells. The average price of an LFP cell was just
under $60/kWh in 2024.
Currently, Greater China has a near monopoly in LFP cell
manufacturing, considering the negligible LFP production capacity
in Europe and North America. However, LFP production capacity is
poised to expand, especially in Europe, through this decade.
For example, last month,
CATL announced an agreement with Stellantis to invest up to
€4.1 billion to form a joint venture that will build a large-scale
LFP battery plant in Zaragoza, Spain. The plant is targeted to
start production by end of 2026. It has also been reported that LG
Energy Solution is aiming to open an LFP plant in Europe.
The addition of LFP capacities outside of Greater China will
raise the global average price of LFP cells in the midterm, but as
the manufacturing cost is brought under control through process
improvements, the global LFP average cell price will gradually fall
below the current level. In fact, the difference of prices for LFP
cells in Greater China versus Europe is expected to contract from
42% currently to roughly 29% in 2030.
EV battery prices at pack level
In terms of EV battery pack prices, the target to bring cost
parity between EVs and internal combustion engine (ICE) vehicles
was always thought to be $100/kWh. According to S&P Global
Mobility's battery price model, the price of battery packs has
already dropped below this mark in some cases.
For example, the price of LFP battery packs manufactured in
Greater China is already considerably below this mark This has
enabled several OEMs in mainland China to price their EVs in
smaller segments on a par with ICE vehicles.
However, NCM811 prices in most regions are still north of
$100/kWh mark, despite the fall in cell prices in the last two
years. Even in Greater China, the cost of an NCM811 battery pack is
about $103/kWh.
EV battery industry trends
The price of battery metals will likely increase in the longer
term; however, due to economy of scale and efficiency gains, the
cost of manufacturing will be lowered. These two effects will
result in a flat price trend, which is in stark contrast with the
exponential price reduction in the past decade.
We also expect a faster move toward cell-to-pack (CTP) and
cell-to-body (CTB) configurations for batteries as automakers look
to reduce weight and cost of manufacturing. In CTP, cells are
directly mounted onto the pack housing, with no modules in between,
reducing the number of components and assembly steps. Mainland
Chinese cell makers such as BYD, with its Blade batteries and CATL,
with its Shenxing and Qilin batteries, have been focusing heavily
on CTP LFP batteries. Some European and American automakers are
also looking at adopting CTP so we may see a few EV models with
this tech in the next few years.
This article is part of a weekly newsletter series titled
BriefCASE, produced by our AutoTechInsight service and featuring
industry developments and technology trends in the automotive
supply chain. The CASE automotive acronym stands for connected,
autonomous, sharing, and electric.
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