Goldman Sachs Research has revealed that the prices of batteries for electric vehicles (EVs) are likely to decrease sharply, which could change the automotive sector dramatically. They predict that the average cost will drop from $149 per kilowatt-hour (kWh) in 2023 to around $80/kWh by 2026. This represents a staggering reduction—nearly 50 percent.
Reasons for Price Drops
There are two major factors behind this trend:
The electric vehicle battery market is still largely controlled by lithium-based technologies.
Even though solid-state batteries were expected to shake things up, their growth has been slower than anticipated. As a result, established lithium-based batteries are expected to solidify their dominance, with LFP batteries anticipated to capture 45 percent of the market by 2025.
Market Challenges
Additionally, the battery industry has considerable entry barriers.
Due to these obstacles, a small number of firms dominate the market—approximately five companies hold around 80 percent of the share. This concentration makes it tough for new entrants to join, especially given the current downturn in the industry.
Goldman Sachs believes that by 2026, the overall cost of owning an EV will be comparable to that of a conventional gasoline vehicle in regions like the U.S.
Even though regulatory backing might boost short-term EV sales, particularly in 2025, a shift toward consumer-driven adoption is anticipated to begin in 2026 as the financial benefits of EV ownership become clearer.
