https://www.economist.com/graphic-detail/2021/03/31/lithium-battery-costs-have-fallen-by-98-in-three-decades Skip to content * Menu * Weekly edition * Search Subscribe Sign in * Featured + Coronavirus + The Biden presidency + Climate change + Brexit + Daily briefing + The World in 2021 + 1843 magazine * Sections + The world this week + Leaders + Letters + Briefing + United States + The Americas + Asia + China + Middle East & Africa + Europe + Britain + International + Business + Finance & economics + Science & technology + Books & arts + Graphic detail + Obituary + Special reports + Technology Quarterly + Essay + By Invitation + Schools brief + The World If + Open Future + Prospero + The Economist Explains * More + Newsletters + Podcasts + Video + Subscriber events + iOS app + Android app + Executive courses * Manage my account * Sign out Search [ ] [20210403_woc382] Daily chart Lithium battery costs have fallen by 98% in three decades In a few years electric vehicles may cost the same as their combustion-engine counterparts Graphic detail --------------------------------------------------------------------- Mar 31st 2021 * * * * BATTERIES HAVE come a long way in 30 years. In the early 1990s the storage capacity needed to power a house for a day would have cost about $75,000. The cells themselves would have weighed 113kg (250lbs) and taken up as much space as a beer keg. Today the same amount of power can be delivered at a cost of less than $2,000, from a 40kg package roughly the size of a small backpack. Such technological progress is crucial for decarbonising the global economy. One of the shortcomings of renewable energy sources is their inconsistency: the sun does not always shine and the wind does not always blow. Batteries can help solve this problem by storing up surplus power when supply is high, for use when it is low. A steadier supply of electricity could eliminate the need for "peakers"--generation plants powered by fossil fuels that utilities bring online only when demand rises sharply, for example on hot days when air-conditioners are cranked up. Such carbon-belching facilities, which run only for a few hours each year, are expensive to build and run, raising costs for consumers. Better batteries are also vital for the continued growth of the electric-car market. Since the Tesla Roadster became the first production vehicle to use lithium-ion cells in 2008, the number of electric vehicles (EVs) on the road has grown to more than 7m. Since batteries currently account for about a third of the price of an electric car, reducing their cost is vital for ensuring that EVs become competitive with conventional ones. What accounts for lithium-ion batteries' plunging prices? In a new paper, Micah Ziegler and Jessika Trancik of the Massachusetts Institute of Technology find that the "learning rate"--the fall in price that accompanies every doubling of cumulative battery production--has increased from 20% to 27% in the past few decades. So every time output doubles, as it did five times between 2006 and 2016, battery prices fall by about a quarter. This phenomenon is driven in part by economies of scale: as more batteries are made, producers can spread out the up-front costs of building factories, and use their influence over suppliers to push for lower prices on crucial inputs. Innovation is also important for cutting costs: Mr Ziegler and Ms Trancik find that a doubling in technological know-how, measured by patent filings, is associated with a 40% drop in price. Battery improvements are likely to keep coming. At the moment the average cost of a lithium-ion battery pack is about $140 per kilowatt hour. The holy grail is $100 per kilowatt hour: at that point EVs will become cost-competitive with combustion ones, according to BloombergNEF, a consultancy. Battery-makers could reach this goal within the next couple of years. Battery storage is also expanding: America installed a record 1.2 gigawatts-worth of storage in 2020. Australia, Germany, and Saudi Arabia have all planned large grid-scale projects along the same lines. Demand for batteries will therefore continue to grow. And prices will continue to fall. Reuse this contentThe Trust Project The Economist Today Hand-picked stories, in your inbox A daily email with the best of our journalism [ ]Sign up More from Graphic detail A dark conundrum Americans are driving less, but more are dying in accidents [20210403_GDP104_0] Daily chart How this summer's staycation boom could change the world [20210403_woc388] Week in charts The EU versus the virus [newheader2_13] * Subscribe * Group subscriptions * Reuse our content * Help and contact us Keep updated * * * * * * Published since September 1843 to take part in "a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress." 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