A study suggests EV battery replacement costs may soon fall below the cost of repairing gas-powered car engines.
This challenges ICE proponents’ argument, who often criticize EV battery replacements for being too expensive compared to traditional engines.
Research by Recurrent indicates that EV battery prices are dropping rapidly, with projections suggesting that by 2030, replacing an EV battery pack could be less expensive than repairing or replacing a gas engine.
This aligns with findings from Goldman Sachs, which predict battery prices will drop to $80 per kilowatt-hour (kWh) by 2026, approximately half of what they cost in 2023.
The downward trend in battery costs is significant. Over the past three years, EV battery prices have halved, and projections indicate they could fall further.
By 2030, Goldman Sachs estimates battery pack costs will reach $64/kWh, though other forecasts, such as those from RMI, predict prices as low as $32/kWh.
Recent developments, including CATL’s offering of lithium iron phosphate (LFP) cells for $56/kWh and similar pricing from BYD, suggest a sustained oversupply in the lithium-ion battery market through 2028, potentially driving prices even lower.
Recurrent highlights the implications of these trends:
“By 2030, pack prices could fall to $50/kWh or less. For a large 100 kWh battery pack, replacement costs might range from $4,500 to $5,000, while a standard 75 kWh pack could cost around $3,375. These prices are comparable to engine replacement costs in gas-powered vehicles.”
This would mark a dramatic shift, reducing battery replacement costs to just 30% of what they were in 2020.
Goldman Sachs attributes the declining prices primarily to falling costs for battery metals like lithium and cobalt, which account for about 60% of a battery’s cost.
The firm highlights that the decreased cost of raw materials accounts for over 40% of the price drop, following a period of “green inflation” between 2020 and 2023.
These cost reductions position the EV industry, though still maturing, to benefit significantly.
For automakers, lower battery costs could translate into increased sales and a faster return on significant investments in EV technology.
For consumers, the prospect of affordable battery replacements makes EV ownership more appealing, alleviating concerns about long-term maintenance expenses.
This encouraging trend signals a bright future for EV adoption, further positioning electric vehicles as a competitive and sustainable alternative to traditional gas-powered cars.