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EV Batteries Price Dropped 30% Since 2009, BNEF Says

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A typical converted EV battery pack

Bloomberg New Energy Finance (BNEF) has recently reported a 14% decrease in electric vehicles’ lithium-ion battery prices. In a statement, BNEF made this comparison to what the average price was in the past year.

BNEF attributes this fall to shifts in production capacity exceeding demand. The London-based research company compared the average batteries cost of $689 per kilowatt-hour (kWh) in the first quarter of the year 2012, with the $800 price a year earlier. Since 2009, electric vehicle battery prices have remarkably dropped (by as a great a difference as 30%), making the overall cost of owning an electric vehicle cheaper than ever.

The cost of an electric vehicle is highly dependent on the corresponding price of the required battery, which is one of the key determinants. Whereas the sharp decline in the pricing of these electric vehicle batteries is highly unwelcome to their respective manufacturers, the trend is, on the other hand, advantageous to consumers. According to the BNEF’s CEO Liebreich Michael, such a dynamic trend is also essential for the sector’s long-term health.

BNEF cited that models of electric vehicles like Nissan Motor Company (7201)’s Leaf, Mitsubishi Motors Corporation (7211)’s i-MiEV, and the Model S of the Tesla Motors Inc. (TSLA), require between 16 kWh and 85 kWh of storage. This accounts for 25% of what their respective costs are.

The challenge in the industry is that it has the capacity to deliver about 10 GWh (or gigawatt-hours; 1 GWh= 1 000 000 kWh) of battery packs above what it really needs at the moment. This is enough for about 400,000 all-electric vehicles. The surplus may surpass 16.9 GWh by 2013, a trend that could force battery prices to drop to $150 by 2030, according to BNEF.

According to 2011 data, only about 43,000 electric vehicles got sold.

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