Electric vehicle (EV) battery packs are now more affordable than ever, with average costs dropping 20% in 2024 to $115 (RM517) per kilowatt-hour (kWh), according to BloombergNEF’s annual battery price survey. This sharp decline, the most significant since 2017, is attributed to an oversupply of production capacity, reduced prices for raw materials and components, and a growing shift toward lithium iron phosphate (LFP) batteries, which are more cost-effective than traditional lithium-ion variants.
The affordability of EV battery packs has long been a critical determinant of the viability of electric vehicles. With prices falling so rapidly, experts anticipate that EVs could reach price parity with petrol-powered vehicles by 2026, a milestone expected to catalyze mass adoption. This projection hinges on battery pack prices dropping below $100(RM450)/kWh, a threshold considered pivotal for widespread EV affordability.
China continues to dominate the EV battery industry, producing enough battery cells in 2024 to meet 92% of global demand across EV and stationary storage applications. This vast production capacity has significantly influenced global pricing trends, making EVs in China cheaper than their petrol counterparts. However, part of this cost advantage is supported by government funding, suggesting that market forces alone may not account for the disparity.
