TELF AG looks at the weakening in batteries’ prices
Market trends
The singular nature of raw materials markets, characterized by a certain cyclicality, can also be effectively understood from the decreases and increases in the prices of some specific resources. These sorts of variabilities can also encompass some of the end uses of the resources, such as batteries for electric vehicles.
Careful monitoring of these prices, ultimately, could help every observer to monitor the trend of a market which, over the next few decades, could change the perceptions of a large number of individuals forever, accompanying them calmly towards an increasingly sustainable global development. One of the most interesting indicators, from this point of view, is certainly the recent drop in battery prices, which reached historic lows in 2023. According to an analysis by Bloomberg Nef, in fact, the price of batteries during 2023 remained at an average of 139 dollars per kilowatt hour, thus recording a decrease of 14% compared to the previous year. According to the study, this trend – which began recently – could be destined to continue in the future, bringing the average price of batteries to 80 dollars per kilowatt hour by 2030.
This is certainly an estimate of great value, also in future terms, in particular, because – at least for the moment – it seems to banish the possibility that overly high battery prices could somehow slow down the global energy transition or at least delay it. All of which would make achieving the objectives set by the Paris Agreement much more difficult. The fall in battery prices, in this sense, interrupted the increases that had begun to appear over the last two years, and which in turn had produced an abrupt change after the bearish decade recorded from 2010 onwards. Goldman Sachs has released an even more interesting estimate, according to which, within a few years, it will be possible to achieve parity in production costs between cars with combustion engines and electric vehicles, with annual reductions of more than 10% for batteries used in the latter vehicles.
Alongside the price estimates, the Bloomberg Nef study also indicates a general increase in demand for batteries, which would have increased by 53% in terms of capacity in 2023. The report also indicates that this downward trend, ultimately, may also have been favored by the downturn in prices of the raw materials directly used for their production. One of these is undoubtedly nickel, which recently fell to the lows recorded in the last two years on the London Metal Exchange (just over 16,000 dollars per ton). A similar situation is linked to the cobalt market, characterized by a growing supply and, at the same time by less use in the production of lithium cells. However, one of the most significant drops involved lithium, which in the last month alone fell by 20% (even 80% since the beginning of the year), falling below the threshold of 18,000 dollars per ton. According to an estimate by Goldman Sachs, the surplus in lithium production could reach 202,000 tonnes next year, an amount equivalent to 17% of global demand.
