The price of large orders for mainstream lithium ion battery cells has fallen to $139/kWh, Sam Jaffe, Managing Director of Cairn Energy Research Advisors explained to institutional investors on the Benchmark World Tour 2017 in New York.
While lithium ion battery prices can still range significantly, large orders from major electric vehicle manufacturers are fast approaching the $100/kWh mark. The question still remains: at what profit, if any, are the battery manufacturers making on this?
“The journey to the mythical $100 per KWh has sped up in the last few years and we’ll definitely arrive by 2020,” Sam Jaffe told delegates at Benchmark Mineral Intelligence’s third annual world tour hosted at UBS’ HQ in New York city.
It is a significant price decline from even five years ago where large orders for lithium ion battery cells were at averaging at $542/kWh.
Low cost and abundant lithium ion batteries are widely believed to be the key enabler for electric vehicles. About 40% of the cost of an EV is the battery pack and with lower lithium ion prices, manufacturers can bring the cost of the car down significantly.
While the production of batteries at a significant scale – the rise of the lithium ion battery megafactories, a term coined by Benchmark – was expected to be critical in bringing battery down costs, it appears for sales at least, prices are already where they need to be for mass adoption of EVs.
“We are now in the era of the semi mass market EV with 2017 seeing the launch of the Tesla Model 3, Chevrolet’s Bolt and Nissan’s new 60kWh LEAF,” Simon Moores, Managing Director of Benchmark explained to delegates.
“For EVs to work, these three vehicles need to see some form of success. To make these cars low cost enough in the long term battery cell costs need to be under $150/kWh.” he added.
While this low cost of lithium ion cells is not a widespread trend in the industry, it is a harbinger of things to come. With 230GWh of new capacity being built in 15 lithium ion battery megafactories being tracked by Benchmark (the equivalent of 3.5m pure EVs), scale and supply chain efficiency will see manufacturing costs of cells continue to fall between 15% and 20% a year until 2020.
What is the Benchmark World Tour?
The Benchmark World Tour is a series of investment seminars on the lithium ion battery supply chain.
Organised by Benchmark Mineral Intelligence and hosted by several of the world’s leading brokers including BMO Capital Markets, UBS and CLSA, institutional investors hear from Benchmark’s analysts and other experts on each part of the supply chain, from raw material to end market.
The World Tour also welcomes speaker/sponsors looking raise investment and enter the supply chain from graphite, lithium and cobalt developers to cathode processing technology companies.
In 2017, the Benchmark World Tour will visit 17 cities with London next up on Monday June 5th in association with UBS.
Find out more at the Benchmark World Tour Homepage.