This year, Bloomberg New Energy Finance has released an important new graphic representation of recent and projected trends in lithium-battery prices.

The graph shows a 40% decrease in lithium-ion battery prices between 2010 and 2012, which is good news for electric vehicle (EV) supporters.

A significant portion of an EV’s price is comprised of the battery price—so lower battery prices mean significantly lower EV prices. Of course, not all EVs use lithium-ion batteries, but a considerable percentage of them do. In recent years, it’s been the trend for major automobile companies to switch from using nickel metal hydride (NiMH) batteries to lithium-ion batteries, which feature a high energy density and low maintenance requirements.

The decrease in lithium-ion battery prices will help to offset original purchasing prices of EVs and should help to accelerate the demand for all types of EVs. As the graph below shows, battery pack cost has been declining steadily since 1995, and at the same time, cumulative production capacity has been rising steadily.

Pictured above is Bloomberg New Energy Finance’s “Lithium-Ion Battery Experience Curve,” which reveals that battery pack prices have fallen 40% since 2010. The reduction in battery cost will help to offset the original purchasing price of many EVs. Source: Battery University, MIIT, IIT, Bloomberg New Energy Finance.

Rising Production Capacity of Lithium-Ion Batteries
Yearly production capacity (measured in megawatt hours) has also been rising, according to a recent report from Navigant Research. The report projected that total worldwide capacity of lithium-ion batteries for transportation applications will increase more than ten-fold, from 4,400 megawatt-hours (Mwh) in 2013 to nearly 49,000 MWh by 2020.

“Li-ion technology continues to improve, as increased energy densities translate into smaller and lighter battery packs with more power,” said David Alexander, senior research analyst with Navigant Research. “At the same time, leading battery cell manufacturers have built new factories utilizing the latest production techniques, including greater automation and faster throughput. This will lead to a reduction in the cost per kilowatt-hour (kWh) over the next few years, provided that volumes continue to increase.”

The report also provides forecasts for revenues from lithium-ion batteries; vehicle roadmaps for hybrid, plug-in hybrid electric vehicle , and battery electric vehicle sales; and a review of competing energy storage technologies, including ultracapacitors and nickel-metal hydride batteries.

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