Summary
- Goldman Sachs researchers expect lithium-ion battery pack prices to fall to $82 per kilowatt-hour by 2026
- Cheaper EV batteries will drive a major rebound in electric car demand in the U.S.
- The projected battery prices will unlock ownership cost parity with gasoline-fueled cars in the U.S.
- Affordable EV models like the $35,000 Chevy Equinox EV are helping drive EV demand
- Battery prices are dropping due to technological innovations and lower input costs, with prices expected to reach $64/kWh by 2030
Article
Cheaper EV Batteries to Drive Rebound in Electric Car Demand
Goldman Sachs researchers are predicting a major rebound in electric car demand in the U.S. thanks to the decreasing costs of lithium-ion battery pack prices. By 2026, the researchers expect battery pack prices to fall to $82 per kilowatt-hour, making electric vehicles cost the same as gas cars on a total cost of ownership basis. This reduction in price is largely due to advancements in technology and lower input costs, which are helping to make electric cars more affordable for consumers. Cheaper batteries are essential for driving industry growth, as most Americans are unlikely to switch to electric vehicles without a significant financial incentive.
Projected Battery Costs and Demand for Electric Vehicles
Goldman Sachs researchers project that global average battery pack prices will drop to $82 per kilowatt-hour by 2026, which is about half of what they cost in 2023. This represents a steep 26% decrease in prices from the current year and a significant reduction from the $780/kWh cost of batteries in 2013. Achieving ownership cost parity with gasoline-fueled cars in the U.S. on an unsubsidized basis is a key milestone that could significantly boost demand for electric vehicles. The Chevy Equinox EV, priced at $35,000 and offering over 300 miles of range, is a standout example of an affordable electric vehicle that could help drive sales.
Factors Driving Battery Price Reduction
Goldman Sachs researchers attribute the faster-than-expected decline in battery prices to two main factors: technological innovation and sliding costs of battery metals like lithium and cobalt. Advances in battery technology have allowed companies to produce batteries with higher energy capacity at a lower cost, while increased mining and processing capacity for battery metals have helped stabilize prices. The gradual decline in battery pack prices through 2030 is expected to benefit both EV manufacturers and consumers, with global average prices projected to reach $64/kWh by the end of the decade.
Economic Outlook for Electric Vehicles in 2026
The researchers at Goldman Sachs are optimistic about the economic prospects for electric vehicles in 2026, anticipating a strong rebound in demand driven by the affordability of EVs. High interest rates and the prohibitively high cost of new and unfamiliar technology have been barriers to widespread EV adoption, but as battery prices continue to fall, consumers may be more inclined to make the switch. The availability of more affordable EV models like the Chevy Equinox EV and the projected drop in battery prices could make buying an electric car a more appealing choice for consumers.
Impact of Total Cost of Ownership Parity on EV Demand
Achieving total cost of ownership parity between electric vehicles and gas cars is seen as a crucial factor in driving the growth of the EV industry. While new models like the Chevy Equinox EV are helping to bridge the gap, traditional automakers are still struggling to turn a profit on EVs due to high battery costs and low production volumes. Purchase incentives like the EV tax credit can support sales in the short term, but long-term success will depend on making electric vehicles a compelling choice for consumers. The projected decline in battery prices is expected to make EVs more competitive with traditional gas-powered cars, leading to increased demand in the coming years.
Outlook for Battery Pack Prices and Industry Growth
Goldman Sachs researchers forecast a continued decline in battery pack prices through 2030, with global average prices expected to reach $64/kWh by the end of the decade. This significant reduction in battery costs will benefit both EV manufacturers and consumers, making electric vehicles more accessible to a broader market. As battery technology continues to evolve and production capacity increases, the affordability of electric cars is projected to improve, driving a major rebound in the demand for EVs in the U.S. and beyond.
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