Electric car batteries are getting considerably cheaper, but not everywhere, and not for everyone. The conclusion is based on the latest report by the International Energy Agency (IEA), which notes that battery prices experienced their steepest decline in eight years last year. The effect of scaling is materializing, but there are global differences to be aware of.
The shift to electric vehicles is continuing to gather momentum worldwide. Still, behind the scenes, a different kind of race is unfolding—one not on roads, but in factories, supply chains, and raw material markets. The latest Global EV Outlook 2025 from the International Energy Agency offers a revealing snapshot of that competition: in 2024, prices for lithium-ion battery packs, or the beating heart of any E, fell by 20%, the sharpest drop since 2017.
Complex picture
This is good news for consumers hoping to buy an electric car without breaking the bank. And it offers a tangible perspective for more budget-conscious electric car models, which carmakers eagerly anticipate will drive the switch to electromobility and bolster return on investment.
Yet the global picture is more complex. While falling prices suggest a maturing market, they also highlight the widening gap between China and the rest of the world in terms of battery production and innovation.
The IEA attributes the price drop to a combination of supply surpluses in key raw materials, such as lithium, growing competition among battery makers, and an increase in production capacity. Lithium prices alone plummeted by nearly 20% last year, despite global demand being six times what it was in 2015.
Battery demand, meanwhile, hit an all-time high of 1 terawatt-hour, mainly propelled by surging sales of electric cars and, increasingly, trucks—particularly in China and parts of Europe.
Slower fall in the EU
The benefits are not evenly distributed. Battery prices dropped globally, yes—but they fell fastest in China, by nearly 30%, compared to just 10–15% in the US and Europe. This trend only widens China’s lead, and the IEA isn’t shy about explaining why. A potent combination of aggressive competition, low profit margins, manufacturing efficiency, and a highly skilled workforce has given Chinese firms a commanding edge.
China also dominates in battery chemistry. Once considered the ‘budget’ option, lithium iron phosphate (LFP) batteries now account for nearly half the global EV battery market, thanks in no small part to relentless development by Chinese manufacturers like BYD.
By the end of 2024, LFP batteries will represent 80% of all EV batteries sold in China. They’ve made strong inroads in Europe and emerging markets like India and Southeast Asia, but the US continues to lag, with a market share of just 10%, partly due to tariffs on Chinese goods.
Casualties
That transformation doesn’t unfold without casualties. In Europe, battery firm Northvolt filed for bankruptcy after failing to meet production goals. Korean manufacturers, which previously held 80% of the EU battery market, saw their share decline to 60% by 2024, as Chinese rivals and the growing popularity of LFP batteries eroded their market share.
Meanwhile, the IEA raises a red flag about the sustainability of these falling prices. Cheap minerals are a short-term boon, but they may discourage future investment in mining, potentially leading to shortages by 2030. The concentration of supply in a few hands—both geographically and commercially—adds another layer of risk.
To avoid these future bottlenecks and price spikes, the agency recommends greater innovation in alternatives such as sodium-ion batteries and direct lithium extraction. But these technologies remain on the horizon. As the race continues, China remains several laps ahead.
