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DOE: In 2022 money, EV battery costs have kept falling

Many analyses have shown that EV battery costs stopped decreasing in 2022, putting off affordability goals. But the U.S. Department of Energy (DOE) recently issued a reality check.

Based on 2022-constant dollars, battery costs actually continued falling last year at the pack level, despite accelerated inflation, according to DOE estimates. The agency estimated the average cost of an EV lithium-ion battery pack at $153/kwh on a usable-energy basis for production at scale of at least 100,000 units annually.

U.S.DOE estimated EV battery pack cost, 2008-2022

 

That represents an 89% decrease from 2008, when a comparable figure was $1,355/kwh, according to the DOE. The agency attributes the decline in cost to “improvements in battery technologies and chemistries, and an increase in manufacturing volume.”

In addition to highlighting the progress made in battery affordability over the past 14 years, the DOE’s constant-dollar analysis is more optimistic than others. On a flat-dollar analysis—and looking at gross capacity rather than usable—battery costs climbed 7% in 2022, according to one report. With battery packs making up so much of the cost of an EV, lowering battery prices is key to making them more competitive with internal-combustion cars, and attainable for more people.

Rivian battery pack

Rivian battery pack

Battery cost was attributed to a range of price hikes over the past year, including some from Tesla, and even a recent price hike from Volkswagen. A recent study suggested that cost was still one of the most critical barriers for EV adoption, so that’s not an encouraging trend.

Auto industry executives have hinted at a softening of the market soon—with one even predicting a market “collapse”—if EV prices don’t fall. It’s too early to tell when that might happen, though.

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