Why batteries are getting cheaper and what that means for car prices

The battery is the most expensive single component of an electric car. How its price develops therefore helps to decide when electric cars draw level with combustion cars in purchase cost. The best-known benchmark is the annual survey by BloombergNEF (BNEF). It determines the average price of a lithium-ion battery pack across all applications, stated in US dollars per kilowatt hour.

The figures at a glance

According to BNEF, the figure in 2010 was over US$1,100 per kilowatt hour. In 2019 it was $156, and in 2021 $132. In 2022 prices rose for the first time since the survey began, because raw materials and components became much more expensive. In 2023 BNEF reported $139, and in 2024, after the sharpest fall since 2017, $115. In 2025 the average fell by a further 8 per cent to $108. Packs for electric cars were even lower, at $99. For 2026, BNEF expects a further but slower decline to just under $105.

The gap to the starting point is large: in 2010, one kilowatt hour of battery capacity cost more than ten times as much as it does today. Without this decline, affordable electric cars with a range suitable for everyday use would hardly be conceivable.

One important point when comparing: BNEF states each figure in real dollars of the respective survey year. Adjusted for inflation, the $139 of 2023 was a record low, even though the number is higher than the $132 of 2021. The series shows the trend reliably, but individual years cannot be compared exactly with one another.

Why batteries are getting cheaper

• Learning curve: experience shows that each doubling of the quantity produced lowers costs by a roughly constant share. Processes become faster, scrap rates lower and cells better.
• Economies of scale: large cell factories spread their fixed costs over more kilowatt hours. Global manufacturing capacity now clearly exceeds demand, which intensifies competition. Most of this capacity is in China.
• Share of LFP: lithium iron phosphate does without nickel and cobalt and is significantly cheaper per kilowatt hour. Its growing share pushes the average down.
• Design: cells are getting larger and are integrated directly into the pack. Fewer modules, housings and cables save material and assembly time.

Raw materials remain a risk

The curve is not smooth. Lithium, nickel and cobalt are traded on markets whose prices fluctuate strongly. 2022 showed how quickly expensive raw materials can reverse the trend. In 2025, by contrast, pack prices fell even though some metal prices rose: overcapacity and competition weighed more heavily. There are also tariffs and regional differences: in China, battery packs are on average significantly cheaper than in Europe or North America. Political factors play a part too, such as export restrictions imposed by individual producing countries. Recycling and cell chemistries with fewer critical raw materials are intended to reduce this dependence in the long term.

What this means for car prices

Cheaper batteries noticeably lower the manufacturing cost of an electric car. That is not passed on to customers one to one. List prices also depend on development costs, equipment, competition, margins and taxes. Manufacturers also sometimes use cost advantages for larger batteries rather than lower prices. The direction is nevertheless clear: the cheaper the kilowatt hour, the sooner electric cars pay off in smaller vehicle classes too. The used car market feels the effect as well: falling prices for new batteries tend to push down the residual values of older electric cars, but at the same time make repairing and replacing batteries after the warranty expires cheaper. The market monitor shows how new registrations and market shares are developing. Which cell chemistry suits which purpose is explained in the article LFP or NMC.

Market monitorNew registrations, car fleet, global market, battery prices and charging points in charts.