According to three different companies, the price per kilowatt hour of a lithium-ion battery could drop from $500 to less than $200 by the year 2020, or as much as a third of current cost. In a Plug-In Cars report, Navigant Research is the latest company to make the claim, citing innovations in the ways in which batteries are made that would allow for a reduction in some of its most expensive components, such as cobalt.
A similar prediction was made last July in a report done by McKinney & Co. which stated that the price of lithium-ion batteries would fall to $200/Kwh by 2020, and $160 by 2025. Tesla CEO Elon Musk was the first to foresee that prices would drop below $200/Kwh back in early 2012. Such a price cut would reduce the cost of an electric vehicle like the Chevrolet Volt and Spark EV (or their next renditions) by as much as $2,000, giving EVs a more competitive chance with lower-priced conventional vehicles. Although electric vehicle sales have been on the rise, they still only make up less than 1% of all new-car sales. If the price of lithium-ion batteries drops as predicted, it is estimated that electric vehicles could capture as much as 5% of the new-car market by 2020.