Globally battery costs have declined by 90% in less than 15 years and upcoming new types of battery technology will revolutionise electric-driven mobility and the energy sector, predicts the International Energy Agency (IEA).

Prices of lithium-ion batteries, which outclassed other forms of batteries like conventional lead acid batteries with progress in research and development and economies of scale in manufacturing, have declined from $1,400 per kilowatt-hour in 2010 to less than $140 per kilowatt-hour in 2023. Further innovation in battery chemistries and manufacturing is projected to reduce global average lithium-ion battery costs by another 40% from 2023 to 2030 and then onwards next-generation sodium-ion batteries will start to dominate the market.

Currently, the global value of battery packs in EVs and storage applications is $120 billion, which will rise to nearly $500 billion in 2030. The total volume of batteries used in the energy sector was over 2400 gigawatt-hours (GWh) in 2023, a fourfold increase from 2020. In the past five years, over 2000 GWh of lithium-ion battery capacity has been added worldwide, powering 40 million electric vehicles and thousands of battery storage projects. EVs accounted for over 90% of battery use in the energy sector, with annual volumes hitting a record of more than 750 GWh in 2023 – mostly for passenger cars. In 2023, there were nearly 45 million EVs on the road, including cars, buses and trucks, and over 85 GW of battery storage in use in the power sector globally.

The energy sector now accounts for over 90% of annual lithium-ion battery demand, up from 50% for the energy sector in 2016 when the total lithium-ion battery market was 10 times smaller. The energy sector, which uses batteries in utility-scale battery projects (65%), behind-the-meter batteries, mini-grids and solar home systems for electricity access, added 42 GW of battery storage capacity globally in 2023, says the IEAs recent analysis 'Batteries and Secure Energy Transitions'.

It observes that the market share for lithium iron phosphate (LFP) batteries, which are lower-cost, less-dense lithium-ion chemistry that does
not contain nickel or cobalt and with lower flammability and a longer lifetime, rose 40% of EV sales and 80% of new battery storage in 2023.

Sodium-ion batteries, which use less expensive materials and do not use lithium, will result in production costs that can be 30% less than LFP batteries. Beyond 2030, battery costs are likely to decline further, and solid-state batteries are on track to be commercially available, with the potential to bring massive performance gains, predicts IEA.

Global investment in EV batteries has surged eightfold since 2018 and fivefold for battery storage, rising to a total of $150 billion in 2023. About $115 billion –the lion’s share – was for EV batteries, with China, Europe and the United States together accounting for over 90% of the total. With the US, Europe and other geographies scaling up, China's dominance will fall in the coming years. China also dominates the battery supply chain with nearly 85% of global battery cell production capacity and substantial shares in cathode and anode active material production. The extraction and processing of critical minerals is also highly concentrated geographically, with China in the lead in processing the most critical minerals, observes IEA.

Lithium Ion Battery prices

Li-Ion battery costs down 90%; Next-gen low-cost tech to power EV, energy transition