The price of the average electric car has come down by nearly 20% in one year. Government incentives explain part of the change but not all of it.
The expensive minerals that go into EV batteries are also getting cheaper.
“The global weighted average price for lithium-ion cell prices has dropped below $100 per kilowatt-hour for the first time in two years on the back of falling raw material prices,” according to a new report from Benchmark Mineral Intelligence.
Related: Why are Electric Car Batteries So Expensive?
Benchmark analyst Evan Hartley explains, “Decreasing cell prices could allow [automakers] to sell mass-market EVs at comparable prices to ICE [internal combustion engine] vehicles.”
Prices for lithium, a significant element component in the batteries of most EVs, “have more than halved since the start of 2023,” the company says. Other necessary materials, like cobalt sulfate and nickel, have also fallen.
The Catch? Geopolitics
“Notably, this is a global average,” Benchmark notes.
The U.S. government offers tax rebates of up to $7,500 on the purchase of many EVs. But, to qualify for the full discount, a car’s battery must use minerals originating in the U.S. or certain partner countries.
Related: New Law Aims to Lower Cost of Building EV Batteries
Notably absent from the list is China. Automakers can use Chinese minerals in batteries, but they’ll lose access to half the tax credit if they do. That can make a car’s price uncompetitive.
Decreasing global prices drive the cost of the minerals down, but automakers might still have to pay more to obtain minerals from the right places.
Parity in Sight
What would it take to make EV prices as low as those of gas-powered cars? Benchmark predicts, “For electric vehicles to reach price parity with internal combustion engine vehicles, battery pack prices need to reach $100/kWh, not accounting for subsidies. This corresponds to a cell price of around $80/kWh.”
Today, the company says, cell prices are $98.20/kWh. That’s down 33% from last March when it hit a high of $146.40.
