EV Batteries Set For 70 Percent Price Drop By 2025: McKinsey Study

Derek Kreindler
by Derek Kreindler
ev batteries set for 70 percent price drop by 2025 mckinsey study

A study by consulting firm McKinsey says that the cost of the lithium-ion batteries used in electric vehicles could tumble by as much as 70 percent by 2025, thanks to a combination of factors.

Widespread production of li-on batteries could be one of the main factors. Reuters explains that

McKinsey predicts the price of a complete lithium-ion battery pack could fall from between $500 and $600 per kilowatt hour now to about $200 in 2020 and to $160 by 2025. If gasoline prices hover around $3.50 per gallon or higher, automakers that purchase batteries at $250 per kilowatt hour could offer electrified vehicles that can compete with cars and trucks powered by advanced internal-combustion engines, which are now significantly cheaper.

Consumer electronics manufacturers are also expected to help make battery technology more viable, as their R&D could lead to faster charging times and longer battery life. While Apple is cited as one of the pioneers of improving li-on batteries, a more apt analogy might be that of laptop computers; 15 years ago, laptops were bulky, cumbersome and heavy with utterly dismal battery life. Today, a MacBook Air with 7 hours of battery time can be had – maybe not cheaply, but available to a broad segment of the market. It’s inevitable that EV batteries are destined for the same progression, but widespread adoption isn’t necessarily guaranteed.

Join the conversation
6 of 29 comments
  • JMII JMII on Jul 12, 2012

    We should all be driving flying cars by now too ;) Anyway I see the biggest hurdle for EVs is the charging infrastructure. If my daily driver could go 40 miles between charges that fine - provided I have a charger at work, a charger at home, a charger at the mall, a charger at the doctor's office, a charger at the gym... etc. Basically anytime the car is stopped/parked it needs to be plugged in and eating up those electrons to recharge.

  • Crosley Crosley on Jul 12, 2012

    I don't doubt a reduction in the price of lithium batteries, but that's hardly what's holding back electric cars. Right now, federal subsidies come awfully close to covering the "cost" of a manufacturers' battery pack. (I think the estimate for the Volt battery pack was $8,000) So to consumers, the battery is essentially "free" already. The biggest issue with electric vehicles is still range and capacity. You're not going to see an affordable, full size electric truck that can tow a payload anytime soon or one that can go hundreds of miles on a single charge. What you'll probably see is more vehicles like the Leaf (enclosed golfcart) that become cheaper, which is still a positive development.

  • Redrum Redrum on Jul 12, 2012

    "15 years ago, laptops were bulky, cumbersome and heavy with utterly dismal battery life" A lot of the improvement in laptop size and battery life has been due to improvements in components that are not the battery. Thinner and more power efficient cpu, memory, screen, introduction of SSDs, etc. I think cars have more challenges in this regard, as they have certain size and safety requirements.

    • El scotto El scotto on Jul 12, 2012

      Yeah but you still have to downsize the battery to fit the smaller components, Moore's Law and all that. I had a couple of Thinkpads and you could've used the batteries as a club. We all (and our shoulders) win with smarter/better technology ;).

  • Jrhmobile Jrhmobile on Jul 12, 2012

    Cool. Then in about 15 years I'll consider buying one.

    • Patrickj Patrickj on Jul 12, 2012

      That's probably about right. 20 to 25 if you're a used car buyer.