The global average price of an EV battery pack dropped below the $100 per kilowatt-hour threshold, considered the milestone at which EVs are price-competitive with conventional cars, the International Energy Agency (IEA) said on Wednesday, but noted that China leads both in market share and low prices.

Falling battery pack prices and rising demand have ushered in a new phase of development of the global battery market, IEA technology and clean energy analysts wrote in a commentary today.

As the average price of a battery pack for a battery electric car fell below the $100/kWh mark, annual battery demand exceeded 1 terawatt-hour (TWh) globally – a historic milestone, the energy agency said.

The plunge in battery metal prices has contributed a lot to the lower cost of a battery pack, considering that lithium prices last year plummeted by 85% from their peak in 2022.

But technology advancements have also made battery packs cheaper through the years, the IEA said.

The price of battery packs for electric vehicles dropped in 2024 by the most since 2017 as oversupply from China and cheaper lithium prices drove the decline, the annual battery price survey by BNEF showed in December.

The average price of a lithium-ion EV battery pack declined by 20% annually to $115 per kilowatt-hour (kWh) in 2024, BNEF’s survey found.

While the IEA is more optimistic about battery pack prices falling below the $100/kWh threshold, it couldn’t ignore the Chinese dominance in battery production and its cheap battery packs.

China produces more than three-quarters of batteries sold globally, and in 2024 average prices there dropped faster than anywhere else in the world, falling by nearly 30%, the IEA said. Batteries in China were reported to be cheaper than in Europe and North America by over 30% and 20%, respectively. Low Chinese battery prices have been a major reason why many EVs in China are now cheaper than their conventional counterparts, the agency’s analysts said.

China’s EV and battery industry dominance is presenting major challenges to battery industries in other countries, the IEA noted.

By Charles Kennedy for Oilprice.com

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