27th Mar 2024

Analyzing the Cost of an Electric Vehicle Battery Cell

The repartition of the cost of a battery

ACC’s mission is to accelerate sustainable mobility for all. For all… Not for a few happy privileged people. For everyone! Indeed, if we really want to have an impact and reduce transport related carbon emissions, electric vehicles need to be widely adopted. 

As Carlos Tavares said during the Las Vegas CES last year, “it is impossible to pass on the total cost to consumers, as it would discourage middle-class consumers from paying thousands of dollars more just to have an electrified powertrain. If EVs are not affordable to the middle class, then their volumes will be small. If the volumes are small, the impact on the planet will be limited, which destroys the purpose of our efforts.”*

And since the battery accounts for a third of the price of the vehicle, it is one of the main adjustment levers that we have to date to reduce the price of electric vehicles. A fantastic opportunity for us, but also a challenging one. 

How are the costs of a battery distributed? Which factors influence these costs? What are the challenges that we, as a cells manufacturer, are facing? This is what we’ll try to answer in this article.

How are the costs of a battery distributed? 

A battery pack is made up of multiple interconnected modules composed of tens to hundreds of rechargeable Li-ion cells, with cells accounting for approximately 60-70% of the total cost of an average battery pack. 

The cathode, the cost driver of EV batteries

Each cell is composed of a cathode, an anode, electrolyte and multiple components such as separators, cans, or connectors. The cathode, which is the positively charged electrode of the battery, is one of the most critical components. Indeed, when a battery is discharged, both electrons and positively charged molecules (lithium ions) flow from the anode to the cathode, which stores both, until the battery is charged again. This means that the cathode significantly determines the performance, range, and thermal safety of the battery, and ultimately of the EV itself. 

Anatomy of a battery

The cathode accounts for approximately 35% of the overall cell’s cost – depending of the price of raw materials. It comprises various refined metals, including lithium and nickel, depending on the cell’s chemistry. Contemporary cathode compositions, such as lithium nickel manganese cobalt (NMC) that is used in ACC’s cells, lithium iron phosphate (LFP), or lithium nickel cobalt aluminum oxide (NCA), are in high demand. Automakers such as Tesla are rushing to secure supplies of the battery metals that make up the cathode, as EV sales soar. 

Other components of EV battery cells

Next in line are the plant’s costs: energy bills, maintenance, etc.. These make up 20% of the total cost. 
The Anode is another crucial component of the battery, accounting for approximately 10% of the total cost. The anode in a Li-ion cell is usually made of natural or synthetic graphite, which tends to be less expensive than other battery commodities.
The Electrolyte and the other components outside of the cathode constitute the remaining 35% of the cell’s cost. 

A fluctuating cost of raw materials, that influences the costs of the cell

As the price of batteries continues to decrease, electric vehicles (EVs) are becoming increasingly popular. However, producing battery cells for EVs at low cost remains a significant challenge. 
Since 2010, the average cost of a lithium-ion (Li-ion) EV battery pack has dropped from $1,200 per kilowatt-hour (kWh) to just $132/kWh in 2021*.  However, the recent surge in prices of essential battery metals like lithium has raised concerns about their future affordability. In 2022, battery prices increased for the first time, rising to $135/kWh. They have since fallen, but prices remain volatile. *** 

At ACC we are working hard to reduce our costs through process and product innovations. And with such a cracking team working relentlessly towards this goal, there is no doubt that we’ll make significant progress over the next few years. 

*Source : Stellantis CEO says EV cost burden is 'beyond the limits' for automakers | Reuters
**Source: BloombergNEF  
*** Source: https://asia.nikkei.com/Spotlight/Market-Spotlight/Battery-costs-rise-as-lithium-demand-outstrips-supply 
Battery cost forecasting: a review of methods and results with an outlook to 2050 - Energy & Environmental Science (RSC Publishing) DOI:10.1039/D1EE01530C
Breaking Down the Cost of an EV Battery Cell (visualcapitalist.com)