Recently, a new report from Goldman Sachs showed that at the battery pack level, the global average battery price has dropped from $153/kWh in 2022 to $149/kWh in 2023.
Goldman Sachs forecasts that by the end of this year, the global average battery price is expected to drop to $111/kWh and further decrease to $80/kWh by 2026. This means that by 2026, the global average battery price will have dropped by nearly 50% compared to 2023, helping EVs achieve cost parity with gasoline vehicles in the US without subsidies.
Why is the decline in EV battery prices faster than expected? Goldman Sachs believes it is mainly due to two factors.
First is technological advancement. Several new battery products have been launched, offering higher energy density at lower costs. The improvement in battery energy density is mainly attributed to innovations in battery structure, with larger battery and battery pack technologies reducing or even eliminating battery modules. Tesla has already started producing its large-size 4680 batteries, but still faces challenges in reducing manufacturing costs.
Second is the continuous decline in the prices of battery metals, including lithium and cobalt. Battery metal costs account for nearly 60% of the battery cost. According to data released by Goldman Sachs, the rise in raw material prices had caused EV battery costs to soar in 2022. Now, battery metal prices have started to fall, and by 2030, about 40% of the reduction in battery costs will come from the decline in battery metal prices.
LFP battery market share is expected to increase.
Goldman Sachs mentioned that the current mainstream power batteries globally are LFP batteries and ternary lithium batteries (Ni-Co-Mn batteries and Ni-Co-Al batteries). Besides these two major batteries, Goldman Sachs also mentioned solid-state batteries and sodium batteries, but believes that both still face challenges in large-scale production.
Currently, ternary lithium batteries hold about 60% market share, while LFP batteries occupy 35-40%.
Goldman Sachs has also raised its forecast for the market share of LFP batteries in 2025 from the previous 41% to 45%, while high-nickel batteries will continue to dominate in the high energy density competition.
In the domestic market, according to data released by Cui Dongshu, Secretary General of the China Passenger Car Association, from January to October this year, China's lithium battery installations reached 406 GWh, up 38% YoY.
Meanwhile, the proportion of car models with battery energy density above 160 Wh/kg from January to October 2024 is 12%, a significant decrease from 18% in 2023, mainly due to the energy density reduction brought by the replacement of ternary batteries with LFP batteries.
Cui Dongshu analyzed that due to the high prices of nickel and cobalt, there is differentiated growth between ternary lithium batteries and LFP batteries. With the growth of long-range products, ternary batteries still have a market, while price reductions are driving the overall increase in the share of LFP batteries.
