With a recent study finding that the costs of producing lithium-ion battery technologies have fallen by about 97 per cent since their commercialisation three decades ago, we look at the reasons why, and the possible implications.

What Is A Lithium-Ion Battery?

A lithium-ion battery is a type of rechargeable battery. The lithium ions in it move from the negative electrode through an electrolyte to the positive electrode during discharge, and back again when charging. Lithium-ion batteries have the advantages of being made small and yet having a relatively high ‘energy density’, a lower self-discharge rate than other battery types and are a low-maintenance battery. This makes them ideal for providing portable electricity and powering many of our favourite electronic business gadgets (e.g. mobile phones, laptops, and tablets). They are also now helping to enable the electrification of cars and buses and are beginning to support the integration of renewable energy resources into the electricity grid.

Cost Decline – Study In March

A previous study in March this year found that since their introduction in 1991, the cost of lithium-ion batteries had fallen at a comparable rate to that of solar photovoltaic panels. This rate of cost decrease for solar panels was thought to be exceptional, but the story of lithium-ion batteries has proved this to be wrong.

New Study – The Reasons For The Rapid Decline in Costs

The latest study, the results of which are published in the Journal Energy and Environmental Science (Micah Ziegler, Juhyun Song PhD, Jessika Trancik) show a 97 per cent reduction in the cost of lithium-ion technologies over the last three decades. The authors of the report suggest that the main reasons for the substantial cost reduction include:

– Greater efforts to increase charge density between the late 1990s and early 2010s (38 per cent cost reduction).

– Reductions in cathode materials prices (18 per cent of the cost reduction).

– Changes in non-material costs (14 per cent of the cost decline).

– A large reduction in costly public and private research and development, which accounted for the majority of the observed cost reduction. Most of the R&D contribution can be attributed to advancements in chemistry and materials science. 

– Learning-by-doing, and economies of scale.

What Does This Mean For Your Organisation?

This massive reduction in the cost of lithium-ion battery technologies, mainly brought about by a reduction in R&D costs, has certainly benefitted organisations in terms of powering the various, ever-more compact devices used daily for work on the go. The cost reduction has also helped the growth of sales of electric vehicles and the general ongoing electrification of transportation.

In terms of the environment, reduced costs associated with electrochemical energy storage technologies may be helping to reduce greenhouse gas emissions by increasing lithium-ion battery usage in stationary applications, helping to compensate for the intermittent supply of clean energy like solar and wind. This is enabling the growth of renewable energy technologies.  Cheaper electrochemical energy storage technologies (like lithium-ion batteries), therefore, is a factor that’s playing an increasingly important role in helping to tackle climate-change and move other green technologies forward.