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EV Battery Costs - Dropping Faster Than Predicted Even By Tony Seba

Battery costs for EVs are dropping faster than expected, as CATL and BYD are producing them for as low as $56/kWh. Over time, this could translate to even cheaper batteries over the coming years and decades.
EV Battery Costs - Dropping Faster Than Predicted Even By Tony Seba

Battery Cost Reductions Happening Faster Than Expected

Summary:

  • Tony Seba shares that CATL and BYD are dropping LFP battery costs to as low as $56/kWh.
  • Leapmotor VP Cao Li says their costs are dropping to $55.62/kWh.
  • Cost curves are like gravity.
  • If this pace keeps up, there are profound implications in a positive direction for the future of EVs.

When looking at these numbers and the astonishing pace of innovation to reduce battery costs, I realized that a 200-mile range EV costing $5,000 could happen even sooner.

China is currently leading the way in these cost declines of battery technology, with CATL and BYD leading the way.

According to the data from "Clean Disruption" and the cost of Lithium-ion battery storage in $/kWh, the numbers look like this:

  • $500/kWh in 2014
  • $250/kWh in 2018
  • $150/kWh in 2021
  • $100/kWh in 2023
  • $50/kWh in 2027
  • $35/kWh in 2030

However, it is looking like the $50/kWh number may be reached here in 2024 and definitely by 2025.

I did some number crunching for the next 11 years, from 2024 to 2035, using the same cost declines as if the $/kWh reaches $50 in 2025, and came up with some numbers. I simply took the rate of progress shown here from 2014 to 2025 using a $500/kWh in 2014 and a $50/kWh in 2025.

The rate of improvement from $500/kWh in 2014 to $50/kWh in 2025, over 11 years, is a 90% improvement. If you take that 90% improvement from $50/kWh in 2025 over 11 years to 2036, it goes something like this:

  • 2025: $50/kWh
  • 2027: $38/kWh
  • 2030: $25/kWh
  • 2033: $12/kWh
  • 2036: $5/kWh

In the end, if this pace of innovation in battery costs being reduced happens, the 200-mile range EV in 2030 would most likely have an around 40 kWh battery pack, be very lightweight, and get about 5 miles per kWh. That pack would cost around $1,000.

Just for fun, if you take 2036 to 2047, and if you use another 90% reduction, you get a cost per kWh in 2047 of around $0.50 or 50 cents. That makes a 200-mile range EV with a 40 kWh battery pack have a pack cost of $20. Seems absolutely insane when you think of it today.

However, Tony has been spot on in his predictions, and it will be interesting to watch the cost decline in batteries over time to see if this pace of innovation continues. It has for computers in Moore's Law, so let's see if it happens for batteries and Wright's Law.

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Cheap and Abundant Batteries Makes EVs Far Superior to Any Other Car

In 22 years or so, batteries could cost 50 cents per kWh, making them as cheap as gigabytes of data storage are today. It's dollars to get hundreds of gigabytes of storage today, and that cost will also continue to go down.

This doesn't just benefit EVS - it also benefits Tesla energy, which is selling Megapacks and PowerWalls. Imagine a 100 kWh Powerwall setup only costing $50 for the battery portion. Seems unbelievable, but that's where we are headed.

Auto and energy storage companies will need to generate their revenue and profits from software and services as the cost of goods becomes very cheap.

All this simply means that solar, wind, and battery energy are going to be the primary energy sources for years and decades to come as their cost declines become absurdly cheap.

Will there be any technology that is able to overcome this one day? Maybe, but I'm not aware of it yet.

In Other Tesla News: This Woman Cooked Seafood In Her Tesla With White Seats - Genius Idea Or Stain Waiting To Happen?

What do you think about the cost declines of batteries that are happening? Will this make EVs and battery storage superior technologies?

Share this article with friends and family and on social media - or leave a comment below. You can view my most recent articles here for further reading. I am also on X/Twitter where I post more than just articles daily, as well as LinkedIn! Thank you so much for your support!

Hi! I'm Jeremy Noel Johnson, and I am a Tesla investor and supporter and own a 2022 Model 3 RWD EV and I don't have range anxiety :). I enjoy bringing you breaking Tesla news as well as anything about Tesla or other EV companies I can find, like Aptera. Other interests of mine are AI, Tesla Energy and the Tesla Bot! You can follow me on X.COM or LinkedIn to stay in touch and follow my Tesla and EV news coverage.

Image Credit & Article Reference: Tony Seba

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