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The cost of battery cells used for electric vehicles has fallen to an average of $110/kWh, making such cars competitive with those using internal combustion engines (ICE), according to Benchmark Mineral Intelligence (BMI).

One barrier to a higher take up of electric vehicles has been the high cost of producing the lithium-ion rechargeable batteries, which according to BMI averaged $120/kWh last year and $280/kWh in 2014.”The holy grail to make electric vehicles cheaper than ICE vehicles is deemed to be battery cells costing $100 kWh,” said BMI MD Simon Moores.

“The reality is at $110/kWh for large automotive contracts we have already reached the tipping point.”

BMI estimates that between 2014 and 2017 the price of battery cells fell 16.5% per annum, but between 2017 and 2020 the drop was only 5.8% per annum.

“We may have seen the last of the big easy wins for lithium-ion battery producers in reducing cost,” Moores said.

“It is now about reducing and stabilising the cost of your biggest input raw materials such as lithium, nickel, graphite, cobalt and manganese.”