Battery cell prices for electric vehicles (EVs) appear to have stabilized at the lower end and could start rising soon, according to PB Balaji, Group CFO of Tata Motors. However, he noted that broader battery pack costs and other related components may continue to decline as production scales up.
“I believe cell prices have more or less bottomed out. From here, they will likely start inching up,” Balaji said during a post-earnings conference call. “We’ll have to wait and see how this trend unfolds.”
Battery cells make up a significant portion of an EV’s total cost, and declining prices have historically played a key role in making EVs more affordable. Lower costs also allow automakers to improve vehicle range and efficiency without substantially increasing prices for consumers.
Industry analysts have long regarded $100/kWh as a critical milestone for EV battery packs to achieve cost parity with internal combustion engine (ICE) vehicles. According to S&P Global Mobility’s battery price model, some battery packs have already fallen below this benchmark.
Balaji highlighted that the recent drop in battery cell prices has enabled Tata Motors to lower EV retail prices. Additionally, the company is now benefiting from India’s Production-Linked Incentive (PLI) scheme, which helps manage manufacturing costs.
Looking ahead, he expects further cost reductions in non-cell components due to increased localization as EV adoption expands. “As production volumes rise, the cost of converting cells into battery packs will also decrease,” he explained. “These efficiencies will primarily be directed towards advancing vehicle development.”
As the EV industry evolves, a combination of economies of scale, government incentives, and technological advancements will continue to shape cost dynamics in the years ahead.
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