Three decades of innovation in lithium batteries and a 99% drop in price, in an illuminating graph
The world has been immersed for years in two essential transitions to leave fossil fuels behind: energy and mobility. But for both to be possible, it is an essential requirement that a technology continue to improve and also drop in price: that of batteries, one of the main components of electric cars and the one responsible for storing excess energy in times of energy surpluses, for example in wind and solar energy. And in fact, this is what he has done: In the last 35 years the price of lithium batteries has plummeted 99%. In 1991, a lithium ion battery cost $9,210 per kWh (in constant 2024 dollars). In 2023, that same kilowatt-hour cost $111: we are talking about a drop of almost 99% in almost three decades. To make it tangible, Hannah Ritchie and Pablo Rosado of Our World in Data gives an example applied to car batteries: the battery of a current standard electric car with a range of 350 to 400 kilometers today costs about $5,000. A decade ago the same component would have cost more than $20,000. In 1991, almost $600,000. There is a strategic threshold that we have surpassed recently: 100 dollars/hWh, considered historically the point of economic parity with the internal combustion vehicle, but At the end of 2025 we will already overcome the barrier reaching 84 dollars/kWh. First of all, let’s start with the presentations: the graphics are from Our World in Dataa project of the Global Change Data Lab linked to the University of Oxford. And the primary source is a data series updated by Rupert Way, built on the original work by Ziegler and Trancik and completed with data from BloombergNEF and Avicenne Energy. All data is expressed in constant 2024 dollars. The price of lithium batteries has fallen 99% in 35 years The first graph shows the evolution of the price of lithium ion cells between 1991 and 2024, in constant 2024 dollars per kWh on a logarithmic axis. The line declines continuously and sharply throughout the series of years without any signs of stabilization until ending around $50-60/kWh in 2024. Evolution of the price of lithium ion batteries: 1991 – 2024. Our World in Data The second graph combines price with global accumulated production and uses a double logarithmic scale: it starts from an installed capacity of 130 kWh in 1991 and reaches 3,510 GWh in 2023. That the line remains straight for more than three decades, in two different graphs and with data from different sources, confirms that The price drop is not a coincidence or a streak. It is a stable mathematical pattern that allows you to project where prices will go. This trend is more important than the fall itself. Every time global cumulative production doubles, battery prices have fallen by 19%. Our World in Data This second chart shows that every time global cumulative lithium-ion battery production doubled, the price fell by 19%. That is the learning rate known as Wright’s Law. The learning curve remains stable for more than thirty years, regardless of financial crises, supply problems and even a pandemic. Behind that graph is that enormous jump from the 130 kWh installed in 1991 to 3,510 GWh in 2023. That is 27 million times more capacity in three decades and each doubling along the way led to a 19% reduction in price. With the current rate of installation, these duplications occur in less and less time, which implies that the curve is not going to slow down due to inertia. These graphs do not describe the past: they are a projection of the future. A stable learning rate of 19% per capacity doubling is a planning tool: it helps the industry and its actors to reliably estimate when storage will reach cost thresholds that make the electricity grid viable with high renewable penetration. According to IRENAthe cost of solar energy fell by 90% between 2010 and 2023 following the same logic. That the threshold has fallen below $100/kWh already has consequences: the European Commission estimates that the EU will need between 200 and 600 GWh of storage by 2030 and precisely this trajectory means that Europe will get the bills for its energy transition. However, we cannot lose sight of the fact that the graphs show the average cell price of the different types of lithium ion batteries, which have very different profiles of cost, life cycles or energy density. That doesn’t appear on the graph. Nor that battery cost is not everythingsince it has associated costs, such as installation or replacement. Likewise, it does not touch on the structural risks of the supply chain: lithium, cobalt or nickel are geographically concentrated and vulnerable to geopolitical tensions, such as warns the International Energy Agency. And although they are becoming cheaper, their weight and volume are still a handicap for some scenarios such as aviation or heavy trucks. 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