Car Battery Prices Explained

Car battery prices are expected to fluctuate as the market experiences rapid growth due to the increasing demand for electric vehicles and the rising need for energy storage solutions. As the world focuses on reducing carbon emissions, the automotive industry continuously develops car battery applications that align with this green initiative while supporting the market.

Why are car battery prices fluctuating?

1. Declining Manufacturing Costs

The EV competition between China and the West made raw materials scale back to stable levels after almost 2 years of spiking prices. As 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.

Additionally, second-hand electric vehicles become increasingly available and affordable, with about 800,000 vehicles in China, 400,000 in the United States, and over 450,000 in France, Germany, Italy, Spain, the Netherlands, and the United Kingdom. Thus, making it competitive with conventional combustion engines.

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. As a result, battery manufacturers heavily invested in expanding production capacity which leads to economies of scale and lower costs. For instance, Toyota mass-produces batteries for hybrid electric vehicles to boost competitiveness and achieve carbon neutrality.

Thus, the increased production coupled with the competition between the Chinese and Western car industries stimulates demand, creating a 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. Also, 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 and 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, significantly dropping 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.

Battery recycling – Sustainability is the blueprint of the EV industry, contributing to a boom in the market. This practice finds its way as the global battery recycling capacity reached 300 GWh last year and is projected to grow to 1500 GWh in 2030.

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.