[Baltimore Sun] EV sales could get jolt if battery prices fall
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Goldman Sachs researchers are forecasting falling electric vehicle battery prices that could put the costs of those cars on par with their gas-powered counterparts within a few years.
Goldman Sachs credits technology advances that increase energy density in EV batteries, along with a drop in green-metal prices, for what could be a nearly 50% battery price decrease by 2026.
Goldman Sachs said that could spur “a consumer-led adoption phase” for EVs, which currently benefit from government incentives.
Global average battery prices declined from $153 per kilowatt-hour in 2022 to $149 in 2023. Goldman Sachs is forecasting they will fall to $111 by the end of the year and to $80 by 2026.
The average EV costs over $56,000, according to Kelley Blue Book. The average transaction price for a gas-powered car last month was about $48,000.
KBB’s Sean Tucker said Goldman Sachs’ forecast makes sense. As both the technologies and supply chains improve, prices will come down. And cutting battery costs would provide a jolt to the EV market.
“The battery’s more than half the cost of the car, so if you cut the battery price in half, you cut the cost of the car significantly. That would matter quite a bit,” Tucker said Friday. “Study after study shows us there are three reasons that people hold back from buying an EV. It’s cost, it’s range anxiety, and it’s the charging infrastructure.”
Mark P. Mills, the executive director of the National Center for Energy Analytics, a national energy think tank, was skeptical of the Goldman Sachs forecast.
Mills said we’re a long way from “true price parity,” especially for the vehicle fueling infrastructure.
The leading EV battery types are lithium-based. Nearly 60% of the cost of batteries is from metals, according to Goldman Sachs.
The metals must be mined, and Mills said there aren’t enough mines to meet mineral demands for EVs at greater scale. And he said new mines take over a decade to develop.
Factor in that wind and solar projects demand many of the same critical minerals used to power EVs, and he doesn’t see a sustained drop in EV battery prices happening soon.
Researchers with Recurrent say EVs haven’t really been around long enough to determine how long their batteries will last.
But Tucker said the EV battery recycling market, which already exists, could be a vital factor in the expansion of the EV market.
“From an extraction standpoint, the difference between an EV and a gas-powered car is that you have to extract gas continuously, whereas once you’ve extracted that lithium from the ground, it’s useful over and over again,” he said. “It’s a matter of recycling it.”
Tucker said the expectations are that most new car sales will be electric by the early 2030s.
But the average car on American roads right now is over 12 years old.
“So, when we get to the point that most new car sales are electric, I’m not saying most cars are electric. That’s decades past that,” he said.
But KBB’s parent company, Cox Automotive, found in a recent study that the majority of EV skeptics might consider buying the cars in the next decade as more barriers fall.
Have a news tip? Contact Cory Smith at corysmith@sbgtv.com or at x.com/Cory_L_Smith.
Content from The National Desk is provided by Sinclair, the parent company of FOX45 News.
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