With the transformation of the global energy mix and the increasing awareness of environmental protection, electric vehicles (EVs) are rising rapidly. By 2030, the cost of replacing an EV battery could be less than the cost of repairing a gasoline-powered engine, according to a new study. This trend marks another major leap forward for the EV industry, with far-reaching implications for consumers, automotive companies, and the global environment.
Figure: The survey shows that by 2030, the cost of replacing the battery of an electric vehicle will be lower than that of a gasoline vehicle to replace the engine
Ⅰ Drivers of declining battery costs
1. Metal prices fell
The decline in battery costs is closely related to the continued decline in the prices of key metals such as lithium and cobalt. According to a report by Goldman Sachs in October 2024, metal prices account for about 60% of battery costs. Over the past two years, lithium prices have fallen from a high of US$700,000 per ton to less than US$200,000. This change directly contributed to more than 40% of the decline in battery prices.
2. Technological progress and economies of scale
With the popularity of lithium iron phosphate (LFP) batteries, battery manufacturers such as CATL and BYD have pulled the cost per kWh below US$56. LFP batteries have gradually become the mainstream of the market due to their low cost, high safety and long life. In addition, mass production has further contributed to the reduction in unit costs. For example, global battery production in 2023 will increase by 35% year-on-year, creating significant economies of scale.
3. The market is oversupplied
According to Clean Energy Associate, the global lithium-ion battery market is likely to remain oversupplied until 2028. Overcapacity provides a cushion against falling prices, while enabling more companies to enter the market at a lower cost, further stimulating competition in the industry.
Ⅱ Battery replacement cost compared with engine replacement cost of fuel vehicles
It is expected that by 2030, the price of battery packs could fall below $50 per kWh. Taking a battery pack with a capacity of 75kWh as an example, the replacement cost is about 3,375 US dollars (about 24,600 yuan). For a higher capacity 100kWh battery, the cost can range from $4,500 to $5,000. In comparison, the average replacement cost of a conventional combustion engine is $3,000 to $6,000, depending on the model.
This means that consumers will no longer have to worry about the cost of battery maintenance when choosing an electric vehicle. This shift will significantly lower the psychological barrier for consumers and lay the foundation for the popularization of electric vehicles.
Ⅲ Multiple impacts on consumers and businesses
1. Good for consumers
1.1 - Reduced maintenance costs: The declining cost of batteries has made the total cost of ownership (TCO) of electric vehicles more attractive, especially in countries with relatively high maintenance costs.
1.2 - Used Car Market Activation: With longer battery life and lower replacement costs, the acceptance of the used EV market will increase further, and the depreciation pressure on owners at the time of resale will also be reduced.
2. Improvement of corporate profitability
2.1- Reduced production costs: The decline in battery prices directly reduces the cost of vehicle manufacturing, providing more flexibility for OEMs in the price war.
2.2- Intensified competition in technology and brand: More automakers will increase their investment in the field of electric vehicles, and compete for market share with technology and service innovation as the competitive point.
For example, BYD has become the global sales champion by virtue of its self-developed battery technology and the integration of the whole industry chain; Tesla, on the other hand, continues to maintain its leading position in the premium market by optimizing production efficiency and battery life. This competitive situation will promote the accelerated upgrading of the entire industry.
Ⅳ Analysis of technological advancements and market trends
1. Key advances in battery technology
In recent years, breakthroughs in solid-state batteries and silicon-based anode technology have further improved battery energy density and safety. For example, CATL has announced that it will mass-produce solid-state batteries with an energy density of 500Wh/kg in 2025. These batteries can increase the range by more than 30% while significantly reducing the charging time.
2. Whole life cycle cost optimization
The reduction of battery replacement costs has also created conditions for the recycling and cascade utilization of used batteries. For example, used batteries can be reused in energy storage, further reducing the carbon footprint of the entire life cycle of an electric vehicle. This not only meets the requirements of environmental protection, but also provides a new profit growth point for car companies and energy companies.
3. Improvement in the total cost of ownership (TCO) of electric vehicles
The International Energy Agency (IEA) expects that by 2026, the acquisition cost of electric vehicles will be at or below that of gasoline-powered vehicles, and the advantages of running costs will be even more significant. This will further drive the adoption of the electric vehicle market. For example, countries such as Germany and Norway have rapidly surpassed 50% penetration of electric vehicles through policy incentives and infrastructure construction.
Ⅴ Environmental and social benefits
1. Reduce carbon emissions
As electric vehicles replace combustion engines, carbon emissions from the transportation sector are expected to be significantly reduced. Taking an ordinary electric vehicle as an example, its life-cycle carbon emissions are 30%-50% lower than that of a gasoline vehicle.
2. Improve air quality
The rollout of electric vehicles will also reduce urban air pollution, especially in large cities with poor air quality. The data shows that London has reduced PM2.5 and NOx emissions by 20% and 25% respectively since the implementation of the EV incentive policy.
3. Promote the optimization of energy structure
The declining cost of batteries has led to the increasing availability of energy storage devices, supporting the use of renewable energy sources (e.g., wind and solar). The synergistic development of electric vehicles and renewable energy will further promote the transformation of the global energy structure.
Ⅵ Conclusions and future prospects
The decline in battery replacement costs is the result of a combination of factors, including falling metal prices, technological advancements, and changes in market supply and demand. This trend will significantly reduce the cost of using electric vehicles, provide consumers with more attractive options, and incentivize automakers to invest more resources in R&D and marketing.
Looking ahead, continued advances in battery technology will continue to drive the rapid development of the electric vehicle industry. It is estimated that by 2030, global electric vehicle sales will account for more than 70% of the new car market, and the era of fuel vehicles may officially come to an end. In the process, electric vehicles will not only revolutionize the way consumers travel, but also shape the future energy and technology landscape.
After 2030, an era centered on clean energy and efficient transportation is accelerating. There's never been a better time for consumers and businesses to embrace this change.
