Over the last three decades, lithium-ion batteries have experienced one of the most impressive cost reductions among modern technologies.
In the early 1990s, batteries were so expensive that a mass-market electric vehicle made almost no economic sense. Today, the situation has changed radically.
In the year 1991 lithium-ion battery cells cost about $9200 per kWh.
By the year 2024 their cost had dropped to approximately $78 per kWh.
This is a drop of more than 99%.
What does this mean in real life
Let's take a modern electric vehicle battery with a capacity of about 60–65 kWh.
Today, the cost of the battery cells themselves for such a battery is approximately $5000.
If one were to try and assemble the same battery at the prices of the early 1990s, the battery cells alone would cost approximately $600 000.
That is to say, the battery would cost several times more than a good house — even before adding the car to it.
This is precisely why early electric vehicles remained an expensive and niche technology for a long time.
Why have batteries become so cheap
The main reason is mass production.
The more batteries the world produced, the cheaper each subsequent battery became.
Manufacturers built huge factories, improved the chemical composition of the batteries, automated assembly, and reduced the amount of expensive materials.
At the same time, energy density also increased.
A modern battery is capable of storing significantly more energy at the same size and weight than batteries of previous generations.
As a result, batteries have become simultaneously cheaper, more compact, and more efficient.
Electric vehicles are becoming more affordable
It is the drop in battery costs that has become one of the main reasons for the rapid spread of electric vehicles.
Today, in some markets, small new electric vehicles are already being sold for about $10 000.
This is especially noticeable in China, where high competition between manufacturers has led to the emergence of a large number of inexpensive models.
In Europe and the USA, electric vehicles are still more expensive, but models in more affordable price categories are gradually appearing there as well.
This is important not only for cars
Cheap batteries are changing much more than just the automotive market.
They allow for the storage of electricity generated by solar and wind power plants.
When the sun shines during the day, excess energy can be stored in huge battery systems and used in the evening or at night.
The cheaper batteries become, the easier it is for energy systems to utilize large amounts of renewable energy.
Therefore, the reduction in battery costs simultaneously accelerates the development of electric vehicles, solar energy, and energy storage systems.
One of the most inconspicuous technological revolutions
The drop in the price of 99% happened gradually, so it rarely made headlines.
But the result is enormous.
Technology that was too expensive for mass adoption until recently is now found in millions of cars, smartphones, home energy storage systems, and large power plants.
And the story is not over yet.
Manufacturers continue to look for cheaper chemical compositions, increase battery lifespan, and build ever-larger factories.
In one generation, a battery that could have cost hundreds of thousands of dollars has turned into a mass-market industrial product costing a few thousand.
And this is one of the best examples of how quickly technology can change when production becomes truly massive.
