Battery scaling

For a few years it looked like the battery pack price curve flattened out, but in 2024 prices decreased by 20%, the biggest annual drop since 2017. Prices are going lower due to manufacturing overcapacity, economies of scale, low metal and component prices and adoption of lower-cost lithium-iron phosphate (LFP) batteries and a slowdown in electric vehicle sales. Energy data provider BloombergNEF estimates current battery manufacturing capacity is 2.5 times that of annual demand. Battery producers’ profit margins have shrunk with some even going out of business. Lower battery prices will likely aid in the adoption of electric vehicles, although they remain costlier than combustion engine vehicles in most markets outside China. In 2025, BloombergNEF forecasts battery pack prices to decrease 3% in 2025.

Source: BloombergNEF, January 2025.