Between 1991 and 2018, the cost of lithium-ion batteries fell by 97%. Why is this the case and what will happen to the cost of lithium-ion batteries in the future? Let’s find out.
Right now, governments around the world are looking to lithium-ion batteries to power the future in myriad ways. This is largely due to the fact that lithium-ion batteries have plummeted in price in recent times, accelerating our collective ambitions to turn away from fossil fuels. Here, we take a look at the rapid decline in the cost of lithium-ion batteries more closely and examine why this has happened.
97% decline in cost in less than 30 years
In 1991, the cost of a lithium-ion battery with a capacity of one kWh cost $7,500. In 2018, the same battery had reached a low of just $181, representing a 97% decline in cost in less than thirty years. According to research from Our World in Data, the key period was between 2014 and 2018, as the cost of lithium-ion batteries reduced by 50% in this period alone. Given the fact that we’re collectively turning to lithium-ion batteries for a range of applications, this reduction in cost is promising. But what caused such a rapid decline in the cost of these batteries?
Investment in R&D
Researchers at MIT discovered that one of the key drivers of this reduction in cost was a long-term investment in R&D, as well as the cost of component materials. Specifically, the research found that approximately 50% of the reduction in cost can be attributed to R&D, particularly as far as chemistry and materials research are concerned. Scientists admitted that much of this research and development was conducted after the commercialisation of lithium-ion batteries and took place across a twenty-year period.
MIT believes that their findings will help to provide guidance on public expenditure and future private investments, which will be key in subsequent use of lithium-ion batteries in applications in future.
Looking to the future
It’s no secret that the huge decrease in price of lithium-ion batteries has come at a crucial juncture for the technology. To scale up climate friendly innovations like battery energy storage systems, being able to rely on affordable li-ion is key. Of course, one of the key uses of li-ion technology today is within the automotive industry, as more people are reliant on electric vehicles than ever before. If the cost of lithium-ion batteries was to go up again in the near future, it would cause problems for manufacturers and consumers alike.
While advances in battery technology will no doubt be made going forwards, research suggests that lithium-ion batteries will remain crucial for EVs and other applications. It’s worth keeping an eye on the development of technology like vanadium flow batteries and how these will impact different markets going forwards.
For more information about lithium-ion batteries
If you’re keen to learn more about the cost and use of lithium-ion batteries in the UK or are interested in partnering with AceOn on an upcoming project, feel free to get in touch with one of our battery experts today.
