The electric vehicle market has transformed immensely in the past dozen years. Most of that transformation comes down to one thing: dropping battery prices. As battery prices have come down, various electric vehicle models have gotten more range for the same price, and many more models have come to market with a competitive mix of pricing and specs. This is a chart I created just about a year ago about this trend:
The Nissan LEAF provides one of the easiest examples of this because the price has been fairly stable while the range on a full charge has more than tripled. (Note: the base 2022 Nissan LEAF still comes with a range of 226 miles.)
The U.S. Department of Energy recently highlighted this trend in its own way as well. Most useful is this spectacular graph:
“Research by the Department of Energy’s (DOE) Vehicle Technologies Office estimates the cost of an electric vehicle lithium-ion battery pack declined 87% between 2008 and 2021 (using 2021 constant dollars),” the DOE writes. “The 2021 estimate is $157/kWh on a usable-energy basis (the equivalent of $143/kWh on a rated-energy basis) for production at scale, i.e., 100,000 units per year. That compares to $1,237/kWh on a usable-energy basis in 2008. The decline in cost is a combination of improvements in battery technologies and chemistries, and an increase in manufacturing volume.”
The 2021 data used there are preliminary data. The sources the DOE cites are as follows:
- 2018–2021: U.S. DOE, Vehicle Technologies Office, using Argonne National Laboratory’s BatPaC: Battery Manufacturing Cost Estimation Tool.
- 2017: Steven Boyd, DOE, Vehicle Technologies Office, 2017 Annual Merit Review, Batteries and Electrification R&D Overview, June 18, 2018, PowerPoint presentation, p. 7.
- 2016: David Howell, DOE, Vehicle Technologies Office, 2017 Annual Merit Review, Electrochemical Energy Storage R&D Overview, June 20, 2017, PowerPoint presentation, p. 6.
- 2008–2015: National Academies of Sciences, Engineering, and Medicine 2017. Review of the Research Program of the U.S. DRIVE Partnership: Fifth Report. Washington, DC: The National Academies Press, p. 173.
Naturally, you can’t talk about this without talking about Tesla. We don’t know Tesla’s battery costs, but we know it was on the leading edge of cutting battery costs for years, and presumably still is. Also, I’m old enough to remember when Elon Musk, JB Straubel, and team announced that they’d build a giant “gigafactory” to build a lot more batteries (as many as had been produced by all companies globally the year before). Aside from simply needing the batteries (for the Model 3, which at the time had not even been revealed), Tesla’s aim was to bring down costs by ramping up production scale. At the time, this was seen as a wild idea. Tesla critics said it would never happen. A few gigafactories later, it not only happened, but it clearly worked. You can now buy a Tesla Model 3 with 262 miles of range for $41,990. The car has much better tech than a Tesla Model S from 8 years ago for a much lower price. As a result of the same battery price trends (and a few other things), this has been the sales growth of Tesla vehicles over the past 9 years:
There’s no way that chart would look anything like that if battery prices hadn’t dropped tremendously in that timeframe.
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