Baku, March 28, AZERTAC

China’s CATL, the world’s largest producer of EV batteries, is saying it will slash the cost of its batteries by up to 50% this year as part of a price war with China’s second largest maker, BYD subsidiary FinDreams, Energy Post reported. The main cause is the overproduction of batteries in China: the oversupply means prices must fall. Muhammad Rizwan Azhar, Waqas Uzair and Yasir Arafat at Edith Cowan University look at the causes and implications, but add that innovation alone will continue to bring prices down over the long term. CATL and BYD already make EV batteries without any cobalt (which is expensive, and linked to child labour and poor mining practices) as they move into lithium iron phosphate (LFP) batteries. More easily done because growth in lithium supply is projected to outpace demand by 34% in the next two years. Meanwhile, Toyota is now focused heavily on making solid-state batteries a reality. And other battery chemistries, from sodium-ion to iron-air to liquid metal batteries, are in the sector’s pipeline. Regarding performance, while today an EV might have a battery with an energy density of 150–250 watt-hours/kilogram, the record in the lab is now over 700 watt-hours/kg.

The main cost of an electric vehicle (EV) is its battery. The high cost of energy-dense batteries has meant EVs have long been more expensive than their fossil fuel equivalents.

But this could change faster than we thought. The world’s largest maker of batteries for electric cars, China’s CATL, claims it will slash the cost of its batteries by up to 50% this year, as a price war kicks off with the second largest maker in China, BYD subsidiary FinDreams.

What’s behind this? After the electric vehicle industry experienced a huge surge in 2022, it has hit headwinds. It ramped up faster than demand, triggering efforts to cut costs.

But the promised price cuts are also a sign of progress. Researchers have made great strides in finding new battery chemistries. CATL and BYD now make EV batteries without any cobalt, an expensive, scarce metal linked to child labour and dangerous mining practices in the Democratic Republic of the Congo.

Economies of scale and new supplies of lithium make it possible to sell batteries more cheaply. And the world’s largest carmaker, Toyota, is pinning its hopes on solid-state batteries in the hope these energy-dense, all but fireproof batteries will make possible EVs with a range of more than 1,200km per charge.