Electric vehicle (EV) battery prices are poised to drop by nearly 50% by 2026, potentially bringing EVs into price parity with traditional cars, spurred by advances in technology and reductions in green metal costs, according to Goldman Sachs Research.
Global electric vehicle (EV) battery prices are forecasted to decrease by nearly 50 per cent by 2026, according to Goldman Sachs Research. This significant reduction is expected to bring EVs to price parity with internal combustion engine (ICE) vehicles in the U.S., potentially without subsidies. This drop in prices is driven by technological advancements that enhance battery energy density and a decrease in the cost of green metals, essential components of batteries.
In recent developments, the global average cost of EV batteries has been steadily declining, from $153 per kilowatt-hour (kWh) in 2022 to $149/kWh in 2023, with projections suggesting a further drop to $111/kWh by the end of 2024. By 2026, prices could plummet to as low as $80/kWh. This anticipated decrease is linked to the introduction of new battery technologies that not only increase energy storage capacity by about 30 per cent but also reduce costs through more efficient designs, such as the cell-to-pack structure, which simplifies manufacturing processes.
The falling prices of battery metals, which constitute a significant portion of battery costs, combined with the emergence of new battery chemistries and formats, such as sodium ion and solid-state batteries, are expected to drive further reductions. However, challenges in scaling solid-state batteries to mass production have delayed their expected rollout.
Despite these technical hurdles, lithium-based batteries continue to dominate the market and are expected to improve further. As battery prices decline and approach parity with ICE vehicles, a resurgence in EV demand is anticipated, especially in economies like the U.S., where the total cost of ownership calculations are becoming more favourable due to sustained high oil prices. Thus, 2026 may mark a turning point where consumer-led adoption of EVs gains significant momentum.
