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Breaking Down the Cost of an EV Battery Cell

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The cost of a lithium-ion battery cell

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Breaking Down the Cost of an EV Battery Cell

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As electric vehicle (EV) battery prices keep dropping, the global supply of EVs and demand for their batteries are ramping up.

Since 2010, the average price of a lithium-ion (Li-ion) EV battery pack has fallen from $1,200 per kilowatt-hour (kWh) to just $132/kWh in 2021.

Inside each EV battery pack are multiple interconnected modules made up of tens to hundreds of rechargeable Li-ion cells. Collectively, these cells make up roughly 77% of the total cost of an average battery pack, or about $101/kWh.

So, what drives the cost of these individual battery cells?

The Cost of a Battery Cell

According to data from BloombergNEF, the cost of each cell’s cathode adds up to more than half of the overall cell cost.

EV Battery Cell Component% of Cell Cost
Cathode51%
Manufacturing and depreciation24%
Anode12%
Separator7%
Electrolyte4%
Housing and other materials3%

Percentages may not add to 100% due to rounding.

Why Are Cathodes so Expensive?

The cathode is the positively charged electrode of the battery. When a battery is discharged, both electrons and positively-charged molecules (the eponymous lithium ions) flow from the anode to the cathode, which stores both until the battery is charged again.

That means that cathodes effectively determine the performance, range, and thermal safety of a battery, and therefore of an EV itself, making them one of the most important components.

They are composed of various metals (in refined forms) depending on cell chemistry, typically including lithium and nickel. Common cathode compositions in modern use include:

  • Lithium iron phosphate (LFP)
  • Lithium nickel manganese cobalt (NMC)
  • Lithium nickel cobalt aluminum oxide (NCA)

The battery metals that make up the cathode are in high demand, with automakers like Tesla rushing to secure supplies as EV sales charge ahead. In fact, the commodities in the cathode, along with those in other parts of the cell, account for roughly 40% of the overall cell cost.

Other EV Battery Cell Components

Components outside of the cathode make up the other 49% of a cell’s cost.

The manufacturing process, which involves producing the electrodes, assembling the different components, and finishing the cell, makes up 24% of the total cost.

The anode is another significant component of the battery, and it makes up 12% of the total cost—around one-fourth of the cathode’s share. The anode in a Li-ion cell is typically made of natural or synthetic graphite, which tends to be less expensive than other battery commodities.

Although battery costs have been declining since 2010, the recent surge in prices of key battery metals like lithium has cast a shadow of doubt over their future. How will EV battery prices evolve going forward?

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Energy

Who’s Building the Most Solar Energy?

China’s solar capacity triples USA, nearly doubles EU.

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Chart showing installed solar photovoltaic (PV) capacity in China, the EU, and the U.S. between 2010 and 2022, measured in gigawatts (GW).

Who’s Building the Most Solar Energy?

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In 2023, solar energy accounted for three-quarters of renewable capacity additions worldwide. Most of this growth occurred in Asia, the EU, and the U.S., continuing a trend observed over the past decade.

In this graphic, we illustrate the rise in installed solar photovoltaic (PV) capacity in China, the EU, and the U.S. between 2010 and 2022, measured in gigawatts (GW). Bruegel compiled the data..

Chinese Dominance

As of 2022, China’s total installed capacity stands at 393 GW, nearly double that of the EU’s 205 GW and surpassing the USA’s total of 113 GW by more than threefold in absolute terms.

Installed solar
capacity (GW)
ChinaEU27U.S.
2022393.0205.5113.0
2021307.0162.795.4
2020254.0136.976.4
2019205.0120.161.6
2018175.3104.052.0
2017130.896.243.8
201677.891.535.4
201543.687.724.2
201428.483.618.1
201317.879.713.3
20126.771.18.6
20113.153.35.6
20101.030.63.4

Since 2017, China has shown a compound annual growth rate (CAGR) of approximately 25% in installed PV capacity, while the USA has seen a CAGR of 21%, and the EU of 16%.

Additionally, China dominates the production of solar power components, currently controlling around 80% of the world’s solar panel supply chain.

In 2022, China’s solar industry employed 2.76 million individuals, with manufacturing roles representing approximately 1.8 million and the remaining 918,000 jobs in construction, installation, and operations and maintenance.

The EU industry employed 648,000 individuals, while the U.S. reached 264,000 jobs.

According to the IEA, China accounts for almost 60% of new renewable capacity expected to become operational globally by 2028.

Despite the phasing out of national subsidies in 2020 and 2021, deployment of solar PV in China is accelerating. The country is expected to reach its national 2030 target for wind and solar PV installations in 2024, six years ahead of schedule.

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