Falling battery prices have been one of the most consistent trends in the electric vehicle industry for the past decade. Prices dropped from significantly more than $1,000 per kilowatt hour in 2010 to $141 per kWh last year. This jump-started one of the biggest shifts in the auto industry in the last century, spurring carmakers to plough billions of dollars into EVs.
The trend has ground to a halt this year, with BloombergNEF’s annual lithium-ion battery price survey showing a 7 per cent increase in average pack prices in 2022 in real terms. This is the first increase in the history of the survey.
There are several factors driving the increase, but the most important is the rising cost of materials such as cobalt, nickel and lithium. While prices for nickel and cobalt have come down in recent months, and lithium may be about to turn, each is still higher than in previous years. This is driven by surging battery demand and a lag in how fast new supply can be brought online.
The average battery price would have been even higher if not for the shift to lower-cost lithium iron phosphate (LFP) batteries, which contain no nickel or cobalt. LFP batteries have gained significant market share in the past three years, with BloombergNEF expecting them to account for about 40 per cent of global EV sales this year. Battery manufacturer margins also are lower this year, suggesting they have absorbed some of the rising costs of materials and components.
To arrive at the average price, BNEF gathered almost 200 survey data points from buyers and sellers of lithium-ion batteries going into passenger EVs, commercial vehicles, buses and stationary storage applications. The headline figure is a volume-weighted average, so it hides a lot of variation by region and application. The lowest prices recorded were for electric buses and commercial vehicles in China at $131 per kWh. Average pack prices for fully electric passenger vehicles were $138 per kWh.
On a regional basis, pack prices were cheapest in China, at $127 per kWh. Packs in the US and Europe were 24 per cent and 33 per cent higher, respectively.
The big question is what happens next. BloombergNEF’s energy storage team expects prices to remain elevated next year, rising slightly in real terms over this year's levels. Beyond that, the team is expecting prices to begin falling again in 2024 as more raw material supply comes online, supply chain pressures ease and next-generation battery technology and pack designs make their way into the vehicle mix.
An often-cited benchmark for when EVs hit price parity with conventional vehicles is $100 per kWh. Based on the updated estimates for the learning rate for batteries from this year’s survey, BNEF predicts that average pack prices should fall below that threshold by 2026. This is two years later than previously expected.
It’s worth noting, though, that $100 per kWh is a nominal figure that’s been around for more than a decade and does not fully take into account how the cost of almost everything has increased due to inflation, particularly in the past 18 months. Average new-vehicle transaction prices in the US climbed to their highest rate of more than $48,000 this year. EVs are pulling up transaction prices a bit, but the cost of making a vehicle with an internal combustion engine also is rising.
EV price parity is better thought of as a range than a fixed threshold. At today’s battery prices, some vehicle segments can already go fully electric cost-effectively without subsidies. Premium electric vehicles, for example, arguably are at price parity with internal combustion models already, as are mini city cars in China, where EV options start at only $5,000. For commercial vehicles such as buses and delivery vans, where total cost of ownership matters most, parity is also already here or very close depending on the region and usage pattern.
Battery prices still need to fall further for more of the middle market to go electric this decade. That's definitely still achievable, but will require much more investment in all areas of the battery supply chain, as well as in R&D and manufacturing process improvements.
Getting there
The flights
Emirates and Etihad fly to Johannesburg or Cape Town daily. Flights cost from about Dh3,325, with a flying time of 8hours and 15 minutes. From there, fly South African Airlines or Air Namibia to Namibia’s Windhoek Hosea Kutako International Airport, for about Dh850. Flying time is 2 hours.
The stay
Wilderness Little Kulala offers stays from £460 (Dh2,135) per person, per night. It is one of seven Wilderness Safari lodges in Namibia; www.wilderness-safaris.com.
Skeleton Coast Safaris’ four-day adventure involves joining a very small group in a private plane, flying to some of the remotest areas in the world, with each night spent at a different camp. It costs from US$8,335.30 (Dh30,611); www.skeletoncoastsafaris.com
The Lowdown
Us
Director: Jordan Peele
Starring: Lupita Nyong'o, Winston Duke, Shahadi Wright Joseqph, Evan Alex and Elisabeth Moss
Rating: 4/5
From Conquest to Deportation
Jeronim Perovic, Hurst
The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
RESULTS
2pm: Handicap (PA) Dh40,000 (Dirt) 1,000m
Winner: AF Mozhell, Saif Al Balushi (jockey), Khalifa Al Neyadi (trainer)
2.30pm: Maiden (PA) Dh40,000 (D) 2,000m
Winner: Majdi, Szczepan Mazur, Abdallah Al Hammadi.
3pm: Handicap (PA) Dh40,000 (D) 1,700m
Winner: AF Athabeh, Tadhg O’Shea, Ernst Oertel.
3.30pm: Handicap (PA) Dh40,000 (D) 1,700m
Winner: AF Eshaar, Bernardo Pinheiro, Khalifa Al Neyadi
4pm: Gulf Cup presented by Longines Prestige (PA) Dh150,000 (D) 1,700m
Winner: Al Roba’a Al Khali, Al Moatasem Al Balushi, Younis Al Kalbani
4.30pm: Handicap (TB) Dh40,000 (D) 1,200m
Winner: Apolo Kid, Antonio Fresu, Musabah Al Muahiri
The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
Pharaoh's curse
British aristocrat Lord Carnarvon, who funded the expedition to find the Tutankhamun tomb, died in a Cairo hotel four months after the crypt was opened.
He had been in poor health for many years after a car crash, and a mosquito bite made worse by a shaving cut led to blood poisoning and pneumonia.
Reports at the time said Lord Carnarvon suffered from “pain as the inflammation affected the nasal passages and eyes”.
Decades later, scientists contended he had died of aspergillosis after inhaling spores of the fungus aspergillus in the tomb, which can lie dormant for months. The fact several others who entered were also found dead withiin a short time led to the myth of the curse.
Disability on screen
Empire — neuromuscular disease myasthenia gravis; bipolar disorder; post-traumatic stress disorder (PTSD)
Rosewood and Transparent — heart issues
24: Legacy — PTSD;
Superstore and NCIS: New Orleans — wheelchair-bound
Taken and This Is Us — cancer
Trial & Error — cognitive disorder prosopagnosia (facial blindness and dyslexia)
Grey’s Anatomy — prosthetic leg
Scorpion — obsessive compulsive disorder and anxiety
Switched at Birth — deafness
One Mississippi, Wentworth and Transparent — double mastectomy
Dragons — double amputee
