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Battery technology charges ahead

New research suggests that the price of lithium-ion batteries could fall dramatically by 2020, creating conditions for the widespread adoption of electrified vehicles in some markets.

01/07/2012
Russell Hensley, John Newman, and Matt Rogers
McKinsey Quarterly
Battery technology charges ahead

Most experts agree that prices for energy storage will fall in coming years, but disagree over how far and how quickly. This is an important debate because a significant drop in battery prices could have wide-ranging effects across industries and society itself. In particular, cheaper batteries could enable the broader adoption of electrified vehicles, potentially disrupting the transportation, power, and petroleum sectors.

 

To inform the debate, we developed a detailed, bottom-up “should cost” model that estimates how automotive lithium-ion battery prices could evolve through 2025. Our analysis indicates that the price of a complete automotive lithium-ion battery pack could fall from $500 to $600 per kilowatt hour (kWh) today to about $200 per kWh by 2020 and to about $160 per kWh by 2025. In the United States, with gasoline prices at or above $3.50 a gallon, automakers that acquire batteries at prices below $250 per kWh could offer electrified vehicles competitively, on a total-cost-of-ownership basis, with vehicles powered by advanced internal-combustion engines (...)

 

Battery technology charges ahead

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