The Briefing
- Declining electric vehicle (EV) battery costs are driving production costs down
- At the battery pack price point of $100/kWh, electric vehicles will become as cheap to make as gas-powered cars
Electric Vehicle Prices Fall as EV Battery Tech Improves
Electric vehicles (EVs) only accounted for around 3.2% of global car sales in 2020—a figure that’s set to grow in the coming decade, largely due to falling EV battery costs.
With rising production and technological improvements, batteries are becoming cheaper to produce, making EVs increasingly competitive with gas-powered cars.
Wright’s Law is Right So Far
According to Wright’s Law, also known as the learning curve effect, lithium-ion (Li-ion) battery cell costs fall by 28% for every cumulative doubling of units produced.
Wright’s Law has accurately predicted the decline in battery costs and so far, reported battery prices have been in line with modeled forecasts. The battery pack is the most expensive part of an electric vehicle. Consequently, the sticker prices of EVs fall with declining battery costs.
By 2023, the cost of Li-ion batteries is expected to fall to around $100/kWh—the price point at which EVs are as cheap to make as gas-powered cars.
| Year | Price of Toyota Camry  | Price of a 350-mile Range EV  |
|---|---|---|
| 2019 | $24,000 | $50,000 |
| 2021 | $25,000 | $39,000 |
| 2023 | $26,000 | $26,000 |
| 2025 | $26,000 | $18,000 |
Figures represent the Manufacturer Suggested Retail Price (MSRP)
EVs are already cheaper to own and operate than comparable gas-powered cars due to savings from gas, maintenance, and resale value. Therefore, a (Read more...)