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Colin Mckerracher Profile picture
@colinmckerrache
Jul 10 • 14 tweets • 4 min read • Read on X
What’s going on with lithium-ion battery prices?

In short, they’re plummeting, and the implications are just starting to ripple out across the automotive and power sectors.

A short thread: Image
Prices for lithium iron phosphate (LFP) battery cells in in China fell 51% over the last year and now sit at $54/kWh. The average global price for these cells last year was $95/kWh.
Drivers: Falling raw material prices.
Cathode share of total cost of a battery cell have fallen from over 50% at the beginning of 2023 to below 30% today.
Drivers: Overcapacity.
There is way more battery capacity than is currently needed, and more is coming. Utilization rates are falling and manufacturers are cutting prices to maintain market share.
Margins are being compressed. Image
Technology and manufacturing improvements are also still playing a big role. China’s battery giants continue to invest heavily in automation and R&D and are launching new products at a frenetic pace.
Battery cells at $50/kWh means the technology to decarbonize most of road transport globally is already here. Pack prices in China for LFP batteries are now at $75/kWh.
China is the world’s largest auto market, and battery-electric vehicles are currently the cheapest drivetrain by average transaction price in the country, even after stripping out mini city cars from the dataset. Image
Another way to look at it: Almost two-thirds of EVs available in China are already cheaper than internal combustion engine models. Still, intense price competition going on and it’s not clear how long everyone can hold on. Image
The stationary energy-storage market may be the biggest beneficiary.
Overcapacity isn’t going anywhere anytime soon, but BNEF expects global stationary storage installations to rise to 67GW/155 GWh this year, up 61% from last year. Image
Over the last four years, there was a steady drumbeat of predictions that batteries and battery metals would be in short supply indefinitely.
That's not what's happened, at least not yet.
That's it for now. For more, see my latest column for @BloombergNEF and @business
bloomberg.com/news/newslette…
This weeks piece features analysis from my brilliant colleagues @AndyLeachBatt, Jiayan Shi, @EvelinaStoikou, Nelson Nsitem and @YayoiSekine
Follow them if you don't already!
@AndyLeachBatt @EvelinaStoikou @YayoiSekine You can sign up for the Bloomberg Hyperdrive Newsletter here:
Daily briefings from around the world, expertly edited by @crtrud with weekly contributions from BNEF analysts.bloomberg.com/account/newsle…
Some more thoughts on the battery overcapacity situation and what it means globally here:

bloomberg.com/news/newslette…

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More from @colinmckerrache

Colin Mckerracher Profile picture
Jul 3
What’s going on with plug-in hybrids?
The technology is enjoying something of a revival, this time led out of China.
A short thread: Image
Why?
Simply put, the latest versions of the technology are aimed at real consumers, not just regulatory compliance.
Average PHEV electric range hit 80km in 2023 and this year will be higher again. Image
There’s also a technology twist.
Just under a third of plug-in hybrid sales in China last year were what’s called extended-range electric vehicles, similar to the original Chevy Volt. These had an average range of 127 kilometers last year Image
Read 11 tweets
Colin Mckerracher Profile picture
Jun 12
Our team at @BloombergNEF published our 10th annual Electric Vehicle Outlook today!
A quick thread on some key findings: Image
@BloombergNEF 1. EV sales are headed for another record year. Despite the headlines to the contrary, global EV sales continue to grow and are set to rise about 20% this year. combustion vehicle sales peaked in 2017 and have no real route back to that peak. Image
@BloombergNEF Still, sales growth is much slower than past years and some markets have stalled. That’s been expected by BNEF for some time, but is also a significant threat to climate targets governments have put in place. There’s no room for complacency. Image
Read 14 tweets
Colin Mckerracher Profile picture
Dec 5, 2023
Lots of headlines written about how EV demand is faltering. Is it?
Global EV sales are on pace for a record year. Heading for around 14 million sold, up 36%.

bloomberg.com/news/articles/…
Image
For now, this looks much more like a winnowing down of who is competitive in the market than a general drop-off in demand.

Pure-play EV automakers are running away with it. They now account for 7% of global vehicle sales. Image
Are EVs just a rich world phenomenon?
No, they're growing fast in emerging economies like India, Thailand and Indonesia.
EV models in the $10,000 range mean more growth ahead. Image
Read 5 tweets
Colin Mckerracher Profile picture
Sep 6, 2023
Did politicians pick winners in supporting EVs, as automotive CEOs like to claim, or was it consumers?

My latest here:
bloomberg.com/news/newslette…
EVs have benefitted significantly from policy support, and would not be where they are without it.
But in most cases that support has been as technology neutral as possible. Fuel cell vehicles were eligible for all the same support, sometimes more. And yet, here's the result: Image
It's worth digging into just how extreme the incentives are now for fuel cell vehicles. In California buyers are eligible for the state subsidy (up to $7,500), national tax credit (up to $7,500), plus up to $30,000 in manufacturer cash back, and a $15,000 fuel card.
Read 10 tweets
Colin Mckerracher Profile picture
Aug 29, 2023
The rise of electric vehicles means gasoline demand in China peaks this year. It's all downhill from here.

My latest:
bloomberg.com/news/newslette…
This isn't BNEF saying it (though we agree), it's Sinopec.
Overall oil demand in road transport will keep growing a bit longer due to diesel use in heavy trucks.
But even there, there's a big shift underway. EV and fuel cell trucks have jumped to 5% share of sales in just a few years. Image
Read 6 tweets
Colin Mckerracher Profile picture
Oct 4, 2022
My latest piece for @business looks at how much EVs actually add to total electricity demand. It's probably less than you think:
bloomberg.com/news/articles/…
@business There will be around 29 million plug-in passenger vehicles on the road by the end of the year. All those together will add around 0.2% to global electricity demand
Global electricity demand is a big number, what about places like Norway, where EVs are already over 20% of the vehicles on the road?
There, they're adding about 1.4%, but the denominator is big in Norway because it's cold and heating is mostly electric.
Read 9 tweets

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