- Prices for lithium-ion battery packs fell 20% in 2024, the largest drop since 2017, according to a study from the International Energy Agency (IEA).
- Cheaper batteries mean cheaper EVs, and electric cars and trucks remain the main driver of battery demand.
- China’s price advantage is widening over the rest of the world.
The war for a zero-emission future of transportation is really a war for batteries. If battery prices—the biggest single cost of any electric vehicle—remain high, then EVs will stay expensive. But if batteries can be made or secured cheaply and locally, prices will decline.
Tesla figured this out early on with its Gigafactory in Nevada. It’s also why automakers like General Motors, Toyota and Ford are planning battery plants of their own—to varying degrees of success thus far.
But as every automaker, battery supplier and energy provider races toward that future, here’s some good news: global prices for lithium-ion battery packs fell 20% in 2024, according to a new study from the International Energy Agency (IEA). That’s the biggest single price drop since 2017.
You can thank increased competition, more production and growing demand for this situation. “Lithium prices, in particular, dropped nearly 20% in 2024, reaching similar prices to those at the end of 2015, despite lithium demand in 2024 being about six times bigger than in 2015,” the report said.
The low prices of critical minerals are due to current surpluses, which is good news for EV costs in the near-term but could lead to under-investment in the future.
Battery Prices (IEA)
Photo by: InsideEVs
Battery pack prices fell in all markets, the report said. But the biggest drops were in—and probably not surprisingly—China. That country has a significant lead in the battery race, both in terms of securing the supply chain and overall technological development.
“China was responsible for 80% of global battery cell production in 2024, while the remainder was produced in the United States, the European Union, Korea and Japan,” the study said. “The faster pace of battery cost reduction and innovation in China has been enabled by fierce competition that has driven down profit margins for most producers (though not all), at the same time as driving up manufacturing efficiency and yields, as well as access to a large, skilled workforce.”
Interestingly, that study also notes that contrary to what you may think, hybrid batteries are more expensive than EV batteries, despite being significantly smaller. “The price of such components is spread across fewer battery cells, increasing the price per kilowatt-hour,” the study said. “In 2024, the average price of a 20 kWh PHEV battery pack—roughly the global sales-weighted average for standard plug-in hybrids—was about the same as a 65 kWh BEV battery pack.”
China’s near-total lead on lithium iron phosphate (LFP) batteries is having a big impact on the market as well. While LFP batteries have long been considered a lower-cost option for EVs, their performance has improved significantly through continued development, making them far more suited for mainstream mass-market car duty than ever.
LFP batteries made up nearly half of the global EV battery market, the study said, also attributable to China. Their use grew by about 90% in 2024 in the European Union, but remained at only 10% in the United States, due to anti-China tariffs. Meanwhile, LFP batteries are sort of taking over the rest of the world.
“Market penetration of LFP batteries is moving even faster in other markets,” the study said. “In Southeast Asia, Brazil and India, the share of electric car batteries using LFP reached more than 50% in 2024. In Southeast Asia and Brazil, LFP uptake is led by imports from China, mostly by BYD, whereas in India it is driven by cars produced domestically, led by Tata Motors.” Meanwhile, LFP battery development is moving more quickly in South Korea and Japan as well.
LFP vs NMC battery adoption
Photo by: InsideEVs
Onto more good news and bad news. On the first front, the U.S. is slowly beginning to catch up. “Manufacturing capacity in the United States grew by almost 50%, led by Korean companies attracted by tax credits, which accounted for nearly 70% of the growth in 2024,” the study said. “This led installed capacity in the United States to surpass that in the European Union, which nonetheless increased by 10% in 2024 despite the Northvolt plant in Sweden being halted following its bankruptcy.”
However, those tax credits could very likely go away soon if President Donald Trump’s budget bill is signed into law. The so-called Big, Beautiful Bill is poised to eliminate both EV tax credits and tax incentives for domestic battery manufacturing. A current version passed by the U.S. House of Representatives cuts both; it is now working its way through the Senate.
Ultimately, the global battery boom isn’t going anywhere. But whether America wants to have a place in it remains to be seen.
Check out the full study here.
Contact the author: patrick.george@insideevs.com
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