A new study shows that the cost of replacing an electric vehicle (EV) battery will soon be cheaper than repairing the engine of a traditional gas car. This finding challenges one of the main arguments used by supporters of gas engines, who often claim that EVs are too expensive to maintain.
Research firm Recurrent has found that the price of EV batteries is dropping fast. They predict that by 2030, the cost of replacing an entire EV battery pack will be less than the cost of fixing a gas engine. This prediction is backed by a recent report from Goldman Sachs, which estimates that by 2026, battery prices will fall to $80 per kilowatt-hour (kWh), which is about half of what they were in 2023.
In just three years, the cost of EV batteries has been sliced in half. The movement is expected to continue, benefiting consumers and EV drivers. Goldman Sachs predicts that by 2030, battery prices will drop to $64 per kWh, but some estimates, like those from RMI, suggest prices as low as $32 per kWh.
The continuous drop in battery costs is good news for both consumers and the EV industry. Lower battery prices will make new EVs more affordable and reduce the financial burden of replacing batteries in used EVs. This is important because most car buyers opt for pre-owned vehicles due to the high prices of new cars, whether they are gas-powered or electric.
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The report from Recurrent suggests that by 2030, battery pack prices could be at or below $50 per kWh. For a large 100 kWh pack, this would mean replacement costs of $4,500 to $5,000, or $3,375 for a more standard 75 kWh pack. These projected costs are similar to the expenses associated with replacing a gas engine, making EVs more appealing to buyers. Additionally, EVs have fewer moving parts compared to gas cars, which means fewer mechanical problems as they age.
Several factors are contributing to the decrease in battery prices. Advances in battery chemistry, such as the use of Lithium Iron Phosphate (LFP), have lowered costs. Improvements in energy density allow batteries to store more energy at a lower cost. Reusing and recycling materials from old batteries is a more cost-effective way to get raw materials.
Goldman Sachs’ report points out that a large part of the price drop is due to falling commodity costs, especially for lithium and cobalt. These metals make up nearly 60% of the cost of batteries. The report states that about 40% of the decline in prices comes from lower commodity costs, following a period of green inflation between 2020 and 2023.
As battery prices continue to fall, the market for second-life batteries is expected to grow. Currently, when an EV battery is replaced, the old pack is often refurbished and resold or used for energy storage. By 2030, consumers might be able to reduce the cost of a new battery by selling their old pack, potentially lowering the replacement cost by $10 to $20 per kWh, depending on the battery’s condition and setup.
The falling cost of batteries is a promising development for the EV industry. As we approach the end of the decade, the fear of expensive battery replacements should no longer scare off potential EV owners. Modern batteries are lasting longer than expected, and replacement costs are becoming more manageable.
