The cost of lithium-ion batteries used in electric vehicles could tumble by more than 70 percent by 2025 as rising oil prices and stringent fuel economy standards push automakers to build more of these cars, according to a studyrecently released by McKinsey & Co .
McKinsey predicts the price of a complete lithium-ion battery pack could fall from between $500 and $600 per kilowatt hour now to about $200 in 2020 and to $160 by 2025.
According to the study, factors leading to the decrease in cost can be attributed to the manufacturing of these batteries on a larger scale. This accounts for one-third of the potential price reduction by 2025. Moreover, battery costs will also fall as the consumer electronics industry, led by companies like Apple, keeps making rapid breakthroughs in expanding the life and power of lithium-ion batteries.
The study deduces that cheaper batteries could enable the broader adoption of electrified vehicles, where battery costs represent one of the main hurdles to the widespread adoption of low-emission vehicles according to analysts.