Car Battery Prices Explained
Car battery prices take another turn in the cooling trajectory. Its steady decline stems from technological advancements and economies of scale.
In 2023, the average price of a car battery ranges around $130 per kilowatt-hour (kWh). However, prices vary depending on the type of battery, the size of its pack, and the manufacturer.
Why are car battery prices fluctuating?
1. Declining Manufacturing Costs
One significant factor that drives down car battery prices is the continuous improvement in manufacturing processes.
For example, as EV ( electric vehicle ) production scales up, it becomes easy for manufacturers to achieve economies of scale, reducing the cost per unit produced. Additionally, technological advancements in battery manufacturing such as automation and process optimization lead to further value reduction.
The Department of Energy Vehicle Technologies Office estimated that the cost of an electric vehicle lithium-ion battery pack declined by 89% between 2008 and 2022.
Thus, the continuous innovation in battery production openly contributes to its diminishing prices.
2. Shifting Industry Application Trends
The automotive industry witnessed a shift towards Lithium Iron Phosphate (LFP) batteries. This battery offers several advantages over traditional nickel-cobalt-manganese (NCM) batteries. Additionally, LFP batteries are popular for their lower cost, longer lifespan, and superior safety characteristics.
Furthermore, most EVs today use these batteries which currently dominate the Chinese car market and slowly make headlines in North America.
Overall, this increased adoption and the availability of resources coupled with advanced applications affect the overall decline in car battery prices.
3. Rising Global Demand
The surge in global EV demand powers a huge cycle of car battery price reduction. For example, electric car sales exceeded $10 million in 2022 and market analysts projected that this strong trajectory will continue in the coming years.
As a result, battery manufacturers heavily invested in expanding production capacity which leads to economies of scale and lower costs.
Thus, the increased production coupled with the competition between the Chinese and Western car industries stimulates demand, creating positive feedback that cools down its prices.
Which variables impact the price of car batteries?
- Declining Manufacturing Costs
- Shifting Industry Application Trends
- Rising Global Demand
- Raw Materials Availability
- Continuous Innovation
Where does the car battery come from?
Car batteries are essential components of modern vehicles, providing the electrical power needed to start the engine, power the lights, and propel electric vehicles.
Additionally, the production of car batteries is a complex process that involves several steps, from raw material extraction to final assembly and testing.
1. Raw Material Extraction
The first step in the production of car batteries is the extraction of raw materials. The most important raw materials for car batteries are lithium, cobalt, and nickel.
Lithium is extracted from brine pools or hard rock mines. Cobalt is mined from underground deposits and nickel is mined from laterite ores.
2. Cathode and Anode Production
The next step is the production of the cathode and anode, the two main electrodes in a car battery. The cathode is made from lithium cobalt oxide (LCO) or lithium nickel manganese cobalt oxide (NCM). The anode is made from graphite.
3. Electrode Coating
Then, these two are coated with a thin layer of active material. The cathode’s active material is a lithium-intercalation compound that stores lithium ions. The anode is typically graphite which allows lithium ions to move freely.
4. Cell Assembly
Next, they are assembled into a cell. The cell is filled with an electrolyte, a solution that allows lithium ions to move between the electrodes and is sealed to prevent leaks.
5. Battery Formation
The fifth step is battery formation. It’s a process of charging and discharging the battery several times to activate the electrodes and optimize battery performance.
6. Final Assembly and Testing
The sixth step involves assembling the cathode and anode into a battery pack. Furthermore, the battery pack is tested to ensure that it meets all safety and performance requirements.
7. Packaging and Shipping
The final and approved battery pack is packaged and shipped to the vehicle manufacturer or directly to the consumer.
Types of Car Batteries
1. Flooded Lead-acid Batteries
Flooded lead-acid batteries are the oldest and most common type of car battery. Additionally, they are the most affordable option. It contains a liquid electrolyte that can be spilled if the battery is tipped over.
2. Enhanced Flooded Batteries (EFB)
This is a newer type of flooded lead-acid battery, designed to be more resistant to vibration and heat. Additionally, it’s a better choice for vehicles with stop-start systems.
3. Absorbent Glass Mat (AGM) Batteries
It’s a sealed lead-acid type of battery. It contains an absorbent glass mat instead of a liquid electrolyte.
Furthermore, AGM batteries are more resistant to vibration and heat than flooded lead-acid batteries. They are more expensive, however, they have a longer lifespan.
4. Lithium-ion Batteries
This most advanced type of car battery has the longest lifespan among the four. Thus, they are the lightest and most powerful type of battery. However, lithium-ion batteries are also the most expensive type of car battery.
What is the future price of car batteries?
Industry analysts and trading platforms predict that the price of car batteries will continue to decrease in the coming years.
According to BloombergNEF, its prices will fall to $73 per kWh by 2030, representing a significant drop from current levels. This decline comes from these factors:
Increased production: As EV demand grows, batteries with efficient mobilization and sustainable properties will continue to dominate the market.
Technological advancements: Researchers are constantly developing new battery technologies that offer higher energy density, faster charging times, and longer lifespans. These advancements will further reduce battery costs.
Material costs: The prices of key battery materials such as lithium and cobalt, are expected to stabilize or even decline in the coming years.
Thus, this stability in raw material costs provides some relief to battery manufacturers, allowing them to pass on savings to consumers.