Electric Car Battery Prices Continue to Fall, Here's What's Predicted for 2026

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For consumers to adopt electric cars in large numbers, they must be affordable enough, and have prices comparable to those of their internal combustion engine counterparts. And the prices at which manufacturers sell their electric models are closely linked to the price of batteries. But fortunately, battery prices continue to fall. In a recent publication, the Goldman Sachs bank shares new projections that suggest that the price of electric car batteries is expected to fall by 50% between 2023 and 2026.

According to Goldman Sachs, the average price fell from $153 per kilowatt-hour in 2022 to $149 per kilowatt-hour in 2023. And by the end of the year, the price per kilowatt-hour is expected to drop to $111. The bank also predicts that the price could drop to $80 per kilowatt-hour by 2026, a 50% drop from 2023. The price will also bring electric cars into parity with their ICE counterparts in the U.S. in terms of ownership costs, without subsidies.

The end of green inflation?

Nikhil Bhandari, co-head of Asia Pacific natural resources and clean energy research at Goldman Sachs Research, says there are two main factors driving battery prices down. First, there is technological innovation, which can improve energy density and/or lower costs. But beyond that, there is also a drop in the prices of raw materials used to manufacture batteries. In fact, nearly 60% of the cost of a battery comes from metal costs.

“When we talk about batteries from, say, 2023 to 2030, about 40% plus of the decline is just coming from the drop in raw material costs because we had a lot of green inflation between 2020 and 2023. The price level of these metals was very high,” Bhandari says. He also predicts a strong recovery in demand for electric cars in 2026. “We think 2026 will be the year when the consumer-led adoption phase will largely start,” he says. He says. Electric car prices are expected to continue to rise drop