The higher cost of owning an electric versus a gas-powered vehicle is a sticking point for many would-be buyers of EVs. Now, the price of a key EV component is falling, raising hopes that automakers could close the gap as they grapple with waning demand.
Batteries make up about one-third to one-fourth of the cost of producing an electric vehicle, according to Goldman Sachs analysts. The firm predicts the global average cost to automakers for batteries in 2024 will average about $115 per kilowatt hours, about 23% lower than last year. Prices are expected fall another 20% in 2025.
Tesla CEO Elon Musk (TSLA) recently noted costs have come down for lithium-ion cells used in EV batteries, a big reversal from the “massive spike” during the pandemic when car manufacturers put in “giant, giant orders.”
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