The most common question in today’s scenario where electric vehicles are trending is whether the lithium ion battery price will rise or fall.
Since lithium ion batteries are used in cars and major electrical appliances to support a greener environment, the price trend has been fluctuating in recent years.
Of course, the price is independent of the type of car, and several electronic segments, then what’s affecting the lithium ion battery price?
Let’s find out!
What does the trend say about the lithium ion battery price?
No one would have thought that Li-ion battery price variation would be so abrupt in the upcoming decades.
In fact, researchers couldn’t believe what made the prices fall so sharply in the last decade. But the results were astonishing!
The lithium ion battery price has declined by 97% in the last three decades. The price of the battery that cost lakhs in the 1990s now costs thousands in 2022. That’s 100 times less!
This promising sharp fall in the lithium ion battery price has majorly halved between 2014 and 2018. What could be the reason?
With the growth in the availability of raw materials and advancements in technologies since 2000 onwards, the lithium ion battery price has fallen steeply.
The methodology for making these lithium ion batteries have changed, bringing to the discussion the fall in Li-ion battery price.
How did technology assist in making batteries cheaper?
Credit the innovations, research and development for the reduction in lithium ion battery price.
As production increases, opportunities for innovations and incentives increase, which leads to falling prices when technology begins to scale.
- During the 1990s, the market size of the Li-ion battery was minimal. Only 0.13 MWh were installed
- By 2016, 78000 MWh capacity was deployed, making the installation of batteries one of the fastest-growing technologies in the world
There is a direct relationship between lithium ion batteries’ price and installed capacity. More the installation of Li-ion batteries, the less the price will be.
For example, if the installation is doubled, the prices will decline to half. Thus, the improvements in technology have shown a positive effect in reducing the lithium ion battery price. Moreover, the battery size has become lighter and smaller for any electrical appliance. Take the example of a mobile phone.
With the technological boom, the size of phones has become more compact and lighter than the ones coming in the last decade. Due to this, battery prices have fallen, reducing the prices of smartphones.
However, weight cannot always be considered a positive factor. The weight and size of the lithium ion batteries to run an aircraft is one of the biggest barriers to converting traditional aviation into a full-grown electrical one. The same logic applies to trucks and ships. This makes the need for batteries to be large and more in weight.
Does Chemistry play a role in reducing the lithium ion battery price?
When the talk is about lithium batteries, how can Chemistry not come into the picture?
Talking of material science and Chemistry, a group of analysts has found that if there is an increase in the cell charge densities, the overall cost of the lithium ion battery is reduced by 38%.
Additionally, the work to reduce the cost of cathode materials was reduced by 18%. 9.4% more cost is reduced from improvements in charge utilisation, and 14% reductions are from non-material costs.
Overall, 54% of cost reductions can be made if the right chemicals and materials are utilised in making the batteries.
However, technology contributed more than Chemistry in becoming the crucial factor for the Li-ion battery price drop.
Price Trend of the Li-ion Batteries
In India, the price of Li-ion batteries varies with kWh. 1 kWh will cost much less than 2 kWh. The price almost doubles if you purchase a higher kWh lithium ion battery.
FYI, presently the lithium-ion battery price for devices as small as power banks cost approximately Rs. 2500 to Rs. 3000. For commercial purposes, these batteries can cost as much as Rs. 1.5 lakhs.
- These prices are subject to decline gradually with time and technological advancements
- The reduction in lithium-ion battery prices has also improved the costs of other technologies, such as solar energy, specifically photovoltaic modules, which are held for clean energy innovation
The exact factor for the reduction in Li-ion battery price is uncertain. However, from the data collected, technology can be held in charge of reducing prices. Li-ion batteries are not sold loosely, not even directly to consumers.
In addition, you cannot run your store of Li-ion batteries. Big brands negotiate the prices when they have to install them in their cars or electronic items.
Since right now, the main focus is on accelerating growth in renewable energy for a sustainable environment, the price drop in Li-ion batteries will be a real game changer.
If the prices tend to fall in the future, there’s a large possibility that these will be used more in producing clean energy from several sources, such as wind or solar.
However, all Li-ion batteries’ prices do not fall quickly. Depending on the type of material and availability, their prices vary.
So, considering all the factors, it can be said that the cost declines may occur faster than previously thought. It will enable increasing volumes and broader adoption of Li-ion batteries, leading to cost declines further.