EV Battery Prices Plunge 50% in 2023

• In late 2023, EV battery prices dropped drastically, oversupply and weakened demand driving prices down 50%. From December to December, LFP battery cells suffered the biggest price reduction, 10.1%, and the electric vehicle market is projected to continue growing. Will things stabilize in 2024?

EV battery prices saw a dramatic decrease in the last quarter of 2023, dropping by 50% compared to January that year, according to TrendForce. Square LFP battery cells suffered the biggest blow with a 10.1% price reduction in December, followed by Pouch NCM523 with 7% and Square NCM523 with 6.7%. The drop was caused by market oversupply, lower-than-expected demand, and suppliers’ need to stabilize cash flows. However, with electric vehicle market projected to grow by 20%, supply chain inventory should normalize and prices stabilize in the second half of 2024.

What Caused the 50% Drop in EV Battery Prices?

• Increased supply of lithium-ion cells outpaced the demand due to manufacturers' need to stabilize cash flows.
• Government incentives, such as tax credits and discounts, have encouraged more buyers, contributing to the oversupply of cells.
• Stagnation in the automotive industry following the COVID-19 pandemic has reduced the number of new electric vehicles being purchased.
• Chinese manufacturers have become more competitive, generating greater competition in the market, which has caused prices to drop.
• The rise of new battery technology, such as lithium-sulfur and solid-state, has caused traditional lithium-ion batteries to become less competitive.
• Companies are investing in new production lines for advanced battery technology, which is reducing the production of traditional lithium-ion cells, creating an oversupply.