The price of lithium-ion batteries used in electric vehicles (EV) is expected to drop by 17% by 2025, due to increasing oil prices and severe fuel economy standards which push automakers to produce more EVs.
According to a study conducted by McKinsey the price of lithium-ion batteries could fall dramatically by 2020, creating conditions for the widespread adoption of electrified vehicles in some markets.
McKinsey expects the price of a complete lithium-ion battery pack is expected to decline from between $500 and $600 per kilowatt hour to about $200 in 2020 and to $160 by 2025.
Production of lithium-ion batteries on a major scale signifies one-third of the potential price reduction by 2025.
Cheaper batteries could facilitate broader adoption of electrified vehicles potentially disrupting the transportation, power, and petroleum sectors, the study revealed.
The expected entry of firms in the automotive sector and implementing new technology from consumer electronics makers would assist to reduce lithium-ion battery costs.
