Raising raw materials and component prices drove lithium-ion battery pack prices to rise for the first time ever this year, delaying the below $100/kilowatt-hour price mark by two years, BNEF said on Tuesday.

According to its annual battery price survey, pack prices increased 7% year-on-year (in real terms) to a volume-weighted average of $151/kWh in 2022. Prices had been falling since BNEF started tracking the market in 2010, when packs prices were around $1,191/kWh. Over the past decade, these prices declined 89% to reach $137/kWh in 2020, Kallanish notes.

BNEF analysts say the upward cost pressure on batteries, also impacted by soaring inflation, outpaced the higher adoption of lower cost chemistries such as lithium iron phosphate (LFP). Even LFP cells, which were around 20% cheaper than lithium nickel manganese cobalt (NMC) cells, felt the bite of rising costs throughout the supply chain. LFP pack prices are now up 27% compared to 2021.

The prices unveiled by the survey represent an average across different types of batteries and end-uses. For BEVs, pack prices averaged $138/kWh and cell prices $115/kWh. That means cells account for 83% of the total price pack, BNEF notes, pointing that traditionally the cell-to-pack cost ratio had been 70:30. Yet, in the past three years, that’s not been the case due to changes in design reducing pack costs.

The survey adds that based on the “updated observed learning rate,” battery pack prices aren’t expected to fall below $100/kWh before 2026, which is two years later than previously anticipated.

“This will negatively impact the ability for automakers to produce and sell mass-market EVs in areas without subsidies or other forms of support. Higher battery prices could also hurt the economics of energy storage projects,” BNEF warns.

Analysts expect prices to remain similar next year, before resuming the downward trend in 2024, when lithium prices are expected to ease on higher supply. Despite the rising prices, battery demand is still expected to reach a new record this year, nearly doubling to 603 gigawatt-hours.  

BNEF has previously forecast battery packs would drop to $92/kWh by 2024 and $45/kWh by 2035. It hasn’t disclosed whether the next decade forecast has been affected.

The $100/kWh price mark is seen by industry as the point at which EVs are price competitive with ICE.