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The prices of electric vehicles i.e. EV will reduce significantly in the next two years. By 2026, EV battery prices will be half of what they were in 2023. Battery accounts for 28-30% of the cost of EV manufacturing. According to the latest study by Goldman Sachs, the average price of EV batteries worldwide in 2022 was $ 153 (about Rs 13 thousand) per kWh.
In 2023, their price will remain at $149 (about Rs 12,500). The price is expected to drop to $80 (about Rs 6,700) per kilo watt by 2026. This is approximately 50% less than in 2022. After battery prices reach this level, the prices of electric cars will become the same as petrol cars.
FICCI demands reduction in tax on EV batteries, charging services from 18% to 5%
To keep EVs competitive in the country, there is a need to reduce GST on batteries and charging services. Also, there is a need to increase the PM e-Drive fund to increase EV sales. FICCI placed this demand before the government in its national conference.
FICCI Electric Vehicle Committee Chairperson Sulajja Firodia Motwani said there is an 18% GST on EV batteries and charging services. We request to reduce it to 5%. So that battery charging becomes affordable for consumers. Anish Shah, President of FICCI and MD and CEO of Mahindra Group, said that electric four-wheelers currently have 1.5% share in India, so a lot of work still needs to be done.
Prime Minister’s advisor Tarun Kapoor said- The automotive industry needs to play a bigger role in bringing new electric cars. The government will consider all aspects including tax issues.
Tesla: 90% cheaper than 15 years ago
The report says that ever since modern electric cars started coming in the market, battery prices have continuously decreased. According to the US Department of Energy, the price of the Tesla Roadster has dropped by about 90% compared to 15 years ago.
Why the decline: Battery prices are declining due to these reasons
1. Advancing Technology: According to analysts involved in the study, cell-to-pack technology requires fewer battery modules. This not only reduces the cost of the battery pack, but also increases the energy density by 30%. This helps in keeping the battery size small.
2. Low prices of raw materials: Raw materials like lithium and cobalt are used in battery manufacturing. These were expensive till 2022. The decline has continued since then. This decline may continue till 2030. Due to this, the cost of battery manufacturing will be reduced by about 40%.
