- By Skand Vivek Dhar
- Fri, 23 Feb 2024 11:55 PM (IST)
- Source:JND
The price of lithium, which is used in rechargeable batteries of electric vehicles, mobile phones, laptops, among others, fell by 80 per cent last year. There is a high possibility of a further decline in its price this year. The battery accounts for about 30 per cent of the total cost of EVs, so the benefit of this will also be passed on to the customers in the form of price cuts. The country’s largest EV company Tata Motors has also started this by making a big cut of up to 1.2 lakh rupees in the prices of its EVs.
The Chief Economist Office (OCE), Australia, said in its report that the current prices of lithium carbonate are USD 13,446 per tonne, which is 80 per cent lower on an annual basis. There is still a possibility of a further decline in the price of lithium, as the market is entering a phase of surplus production.
The demand for batteries has been lower than expected due to the fear of a decline in EV sales in China. More than half of the EVs in the world are sold in China. As a result, the demand for lithium from battery manufacturers has also decreased. On the other hand, mining companies had increased the production of lithium in 2022 due to the rise in its prices, which is still continuing.
Dinesh Arjun, CEO of Raptee Energy Pvt Ltd, a company that makes electric vehicles, says that the price of batteries is falling for several reasons. First, there is ease in the global supply chain, which has led to an increase in production and a decrease in costs. Governments around the world are aggressively promoting the mining and cell manufacturing ecosystem through subsidies, which is also reducing costs. As a result, there was an oversupply of batteries in the past few months, while demand fell. This led to a decline in battery prices.
In addition to global factors, some domestic measures are also helping to reduce battery prices in the country and will do so. According to a report by rating agency Crisil, the government’s announcement of viability gap funding for battery storage systems should result in a battery storage capacity of about 4 gigawatts in the country by fiscal year 2028. Until now, the country’s battery storage capacity was low due to the high cost of batteries, but steps like the Viability Gap Funding (VGF) scheme will also eliminate this shortfall.
Arjun says that in the last three months alone, there has been a 14 per cent decline in battery prices. It has now reached a record low of USD 139 per kilowatt. This downward trend will continue, as lower battery costs make EVs more affordable for consumers. This will accelerate the adoption of EVs.
Manish Chugh, co-founder and director of Aponyx Electric Vehicles, also agrees with Dinesh Arjun. Chugh says that the decline in lithium battery prices is a game-changer for the EV sector. In 2023, there was an 80 per cent decline in lithium prices, and the surplus from lithium deposits has paved the way for a more durable and affordable future.
Will This Trend Continue In Future?
Arjun says, this trend of decline in battery costs is expected to continue in the future as well. EV makers will reduce prices, as their costs will clearly come down and the increasing competition in the market will force them to do so.
Manish Chugh told Jagran Prime that we estimate that this trend of decline in battery prices will continue, which will reduce the cost of EVs even more in the coming years. The decline in lithium battery prices will accelerate the process of making electric mobility more accessible and affordable for consumers worldwide.
Ankit Hakhu, director of Crisil Ratings, says, “VGF battery-storage projects can help reduce costs by up to 40 per cent. Meanwhile, battery prices have also fallen to around USD 140 per kilowatt-hour. Considering the increase in lithium mining capacities, it can be assumed that prices may not go down further, but they will not go up from here either.”
(Note: This story has been translated by Ankit Kumar for Jagran English.)