In recent years, battery prices have declined due to increased global production of electric vehicle batteries. ESource estimates that the current average battery price is $128 per kilowatt-hour, and may drop to around $110 per kilowatt-hour by next year. However, this decline in average battery prices is not expected to last long. ESource estimates that battery prices will surge by 22% between 2023 and 2026, reaching a high of $138 per kilowatt-hour, before resuming a stable downward trend by 2031, potentially falling as low as $90 per kilowatt-hour.
Jaffe stated that battery prices are expected to surge due to a significant increase in demand for key battery raw materials such as lithium. "There is indeed a lithium shortage now, and it's going to get worse. Without mining lithium, batteries cannot be produced." ESource predicts that the soaring battery costs could push up the price of each electric vehicle sold in 2026 by $1,500 to $3,000. The company also lowered its 2026 electric vehicle sales forecast by 5% to 10%.
According to the latest forecast from another automotive market consulting firm, annual sales of electric vehicles in the United States are expected to exceed 2 million units by then. As more Americans embrace electric vehicles, automakers are expected to launch more new electric vehicle models.
Despite a consensus among industry executives and government leaders that more work needs to be done to secure raw materials, Esource says the number of mining projects remains shockingly low. "With lithium prices rising nearly 900% in the past 18 months, we expected the capital markets to open the floodgates and establish dozens of new lithium mining projects," Esource wrote in a report. "But the opposite has happened; investment in mining projects is very limited, and most of that investment is coming from within our country."
