The average price of lithium-ion battery packs fell to a record low of $108 per kilowatt-hour in 2025, according to BloombergNEF’s annual Battery Price Survey — breaching for the first time the symbolic threshold that economists have long identified as the point at which electric vehicles reach upfront cost parity with internal combustion engine vehicles in most major markets. The figure represents a 20% decline from the 2024 average of $135/kWh and marks the steepest single-year drop since 2017.
What Drove the Decline
Three converging forces pushed prices down in 2025. The most significant was the continued collapse in lithium carbonate spot prices, which fell from $15,000 per ton in early 2024 to below $9,500 per ton by December 2025, driven by oversupply from expanded mining operations in Australia, Chile, and China’s Jiangxi Province. Cathode and anode material costs followed lithium downward, with graphite prices declining 12% year-over-year.
Second, manufacturing scale continued to exert deflationary pressure. Global lithium-ion cell production capacity exceeded 2,500 GWh annually by mid-2025, according to Benchmark Mineral Intelligence, far outstripping the 1,100 GWh of actual demand. The resulting overcapacity, concentrated heavily in China, forced cell producers to compete aggressively on price.
Third, lithium iron phosphate (LFP) chemistry continued to gain market share at the expense of higher-cost nickel-manganese-cobalt (NMC) cells. LFP accounted for 45% of global EV battery installations in 2025, up from 38% in 2024, and its simpler, cobalt-free cathode contributed to lower pack-level costs. The average LFP pack price reached $89/kWh, while NMC packs averaged $119/kWh.
- 2025 average pack price: $108/kWh (volume-weighted global average)
- LFP pack average: $89/kWh
- NMC pack average: $119/kWh
- Cell-only average: $78/kWh (down from $95/kWh in 2024)
“Crossing the $100/kWh mark for LFP packs is a structural milestone. It means that a compact EV with a 50 kWh battery can carry a pack that costs less than $5,000 — fundamentally changing the economics of entry-level electric mobility.” — Yayoi Sekine, head of energy storage, BloombergNEF
Regional Variations
The BNEF data revealed significant regional disparities. Chinese-manufactured packs averaged $94/kWh, 25% below the global mean, reflecting the country’s integrated supply chain from raw materials through cell assembly. European pack prices averaged $126/kWh, weighed down by higher energy costs and the early-stage status of the continent’s cell manufacturing buildout. North American prices came in at $128/kWh, influenced by tariffs on Chinese battery imports and the nascent state of domestic cathode and anode production.
The price gap between China and the West has widened every year since 2022, raising questions about the competitiveness of non-Chinese EV manufacturers who rely on domestically produced cells. The U.S. Inflation Reduction Act’s production tax credits — worth up to $45/kWh for cells manufactured domestically — partially offset the differential, but have not eliminated it.
Implications for the Market
At $108/kWh, battery costs now account for 26%–30% of the total manufacturing cost of a midsize EV, down from 40% as recently as 2021. BNEF projects that pack prices could fall to $80/kWh by 2028 if lithium prices remain stable and manufacturing utilization rates improve. At that level, EVs would be unambiguously cheaper to produce than equivalent combustion vehicles across all segments, from subcompacts to pickup trucks.
The implications extend beyond passenger vehicles. Grid-scale battery storage economics have improved in lockstep, with utility-scale LFP systems now being contracted at levelized costs below $50/MWh in China and parts of the Middle East. As pack prices continue their downward trajectory, the remaining barriers to electrification become less about technology and more about infrastructure, policy, and consumer behavior.
