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Tuesday, August 14, 2012

Lithium ion battery prices to tumble 60% by 2020

The price of automotive lithium ion batteries is expected to fall dramatically by the end of the decade and even further by 2025, according to a McKinsey study released today.

The consulting firm says the price for a "complete automotive lithium ion battery pack" could drop from $500 to $600 per kilowatt hour today to about $200 by 2020 and $160 by 2025.

This report looks identical to one released last month and echos what the U.S. Energy Secretary Steven Chu said in January of this year and what Obama said two years ago.

The report says nearly 30 percent of the cost reductions -- much of them achievable by 2015 -- will come from manufacturing, with improvements in manufacturing processes, standardizing equipment and spreading fixed costs over higher unit volumes.

The report says that innovations that lead to price reductions in automotive lithium ion batteries will be seen first in other areas such as the consumer electronics market.

The increasingly sophisticated energy storage technologies in tablets, smart phones and laptop computers have "cost positions" that continue to improve.

Coauthored of the report John Newman, an associate McKinsey partner in San Francisco said "As a strategist, you need to really understand that. You can't look at only what's going on within the industry," Hensley said. "You have to look outside the industry to understand what's going on with this one."

Source: Automotive News

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