Battery electric vehicles (EVs) are one of the key alternatives to petroleum-driven vehicles. The costs of battery cells has always been one of biggest obstacles to the development of EVs, forcing manufacturers to trade off between a model’s price and the range it can travel on a single charge.

Based an analysis of more than 80 separate estimates of the costs of lithium-ion battery cells, which are commonly used in EV battery packs, the study finds that estimates fell by about 14% per year between 2007 and 2014, from more than 1000 USD to around 410 USD per kilowatt-hour. Battery costs for EV market leaders Nissan and Tesla were found to be even lower, at around 300 USD per kWh. Many analyses, especially academic analyses, of the future market potential of EVs could thus be based on significant overestimates of battery costs.

The study shows that the rate of technological development, the learning and knowledge gained as more and more batteries are produced, has had a clear influence on costs, as would be expected: a cost reduction in the range 6-9% following each cumulative doubling of production. The authors suggest that continued declines of around 8% per year are likely, even without major advances in battery chemistry. However, there are large uncertainties in the calculations, as they are based on only a few years of EV development.

The findings have significant implications for forward-looking work done by researchers and agencies trying to model and visualize the future energy and transport systems.

The joint SEI-Royal Institute of Technology (KTH) study was supported by the Nordic Energy Research (NORSTRAT) and the European Union Seventh Framework Programme for Research and Technological Development (FP7) PATHWAYS project.

Read the paper (external link to journal, paywall)

Read a pre-publication version of the article

Read a blogpost by the authors (external link to RTCC)

Read an earlier paper on obstacles to EV development in Sweden »