40% drop in 2023-2025 EV battery prices will boost sales

Electric vehicle (EV) battery prices are expected to see a significant decline in the coming years, leading to an increase in EV demand. Goldman Sachs recently released an analysis highlighting the factors that could contribute to lowering EV battery prices and boosting the adoption of electric vehicles. The analysis predicts nearly a 40% decrease in EV battery prices between 2023 and 2025, potentially leading to cost parity with internal-combustion vehicles in some markets as early as next year, without the need for subsidies.

Lower Materials Costs and Stagnation in EV Sales Contributing to Price Drops

One of the key factors contributing to the decrease in EV battery prices is the lower materials cost, along with a stagnation in EV sales. The current stagnation in demand for EVs is allowing the supply to catch up, which is helping to lower battery prices. Goldman Sachs has revised its forecast for global battery demand growth in 2024 to 29% year-over-year, down from the previous projection of 35%. The firm estimates that battery demand increased by 31% in 2023.

Impact on Battery Materials Market and Innovation in Battery Technologies

The decrease in demand for batteries has also had an impact on the battery materials market, cooling the demand for metals such as nickel and lithium. This cooling effect, combined with potential battery innovations, such as new solid-state chemistries or improved manufacturing processes, could further decrease battery prices. Goldman points out that batteries can represent up to one-third of the cost of an EV, making any decrease in battery prices significant for the overall cost of electric vehicles.

Price Trends and Market Share Projections

While EV battery prices soared in 2022 and then dropped in 2023, the Energy Department notes that even with fluctuations, there is an overall downward trend in battery costs when adjusted for inflation. Goldman Sachs predicts that battery prices will continue to fall significantly through 2025 and then level off. This could lead to a faster adoption of EVs, with analysts predicting that EVs could reach a 50% market share in the U.S. by 2030 and a 68% market share in the European Union by the same year.

Challenges and Considerations for Future EV Adoption

Despite the positive outlook for EV adoption, there are challenges and considerations that could affect the trend. The International Council on Clean Transportation (ICCT) has also made predictions that an increase in the lithium supply could make EVs cheaper than gasoline cars in the near future. However, factors such as the use of super-sized batteries in large trucks and SUVs could potentially slow down the trend.


In conclusion, the analysis from Goldman Sachs highlights the potential for a significant decline in EV battery prices in the coming years, which could lead to increased demand for electric vehicles. Lower materials costs, a stagnation in EV sales, and potential battery innovations are all factors contributing to this trend. While there are challenges and considerations to address, such as the use of larger batteries in certain vehicle types, the overall outlook for EV adoption looks promising. If battery prices continue to fall as predicted, the adoption of electric vehicles could accelerate, leading to a significant shift in the automotive industry towards cleaner and more sustainable transportation options.

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