Electrification
Breaking Down the Cost of an EV Battery Cell
Breaking Down the Cost of an EV Battery Cell
As electric vehicle (EV) battery prices keep dropping, the global supply of EVs and demand for their batteries are ramping up.
Since 2010, the average price of a lithium-ion (Li-ion) EV battery pack has fallen from $1,200 per kilowatt-hour (kWh) to just $132/kWh in 2021.
Inside each EV battery pack are multiple interconnected modules made up of tens to hundreds of rechargeable Li-ion cells. Collectively, these cells make up roughly 77% of the total cost of an average battery pack, or about $101/kWh.
So, what drives the cost of these individual battery cells?
The Cost of a Battery Cell
According to data from BloombergNEF, the cost of each cell’s cathode adds up to more than half of the overall cell cost.
EV Battery Cell Component | % of Cell Cost |
---|---|
Cathode | 51% |
Manufacturing and depreciation | 24% |
Anode | 12% |
Separator | 7% |
Electrolyte | 4% |
Housing and other materials | 3% |
Percentages may not add to 100% due to rounding.
Why Are Cathodes so Expensive?
The cathode is the positively charged electrode of the battery. When a battery is discharged, both electrons and positively-charged molecules (the eponymous lithium ions) flow from the anode to the cathode, which stores both until the battery is charged again.
That means that cathodes effectively determine the performance, range, and thermal safety of a battery, and therefore of an EV itself, making them one of the most important components.
They are composed of various metals (in refined forms) depending on cell chemistry, typically including lithium and nickel. Common cathode compositions in modern use include:
- Lithium iron phosphate (LFP)
- Lithium nickel manganese cobalt (NMC)
- Lithium nickel cobalt aluminum oxide (NCA)
The battery metals that make up the cathode are in high demand, with automakers like Tesla rushing to secure supplies as EV sales charge ahead. In fact, the commodities in the cathode, along with those in other parts of the cell, account for roughly 40% of the overall cell cost.
Other EV Battery Cell Components
Components outside of the cathode make up the other 49% of a cell’s cost.
The manufacturing process, which involves producing the electrodes, assembling the different components, and finishing the cell, makes up 24% of the total cost.
The anode is another significant component of the battery, and it makes up 12% of the total cost—around one-fourth of the cathode’s share. The anode in a Li-ion cell is typically made of natural or synthetic graphite, which tends to be less expensive than other battery commodities.
Although battery costs have been declining since 2010, the recent surge in prices of key battery metals like lithium has cast a shadow of doubt over their future. How will EV battery prices evolve going forward?
Electrification
How Clean is the Nickel and Lithium in a Battery?
This graphic from Wood Mackenzie shows how nickel and lithium mining can significantly impact the environment, depending on the processes used.

How Clean is the Nickel and Lithium in a Battery?
The production of lithium (Li) and nickel (Ni), two key raw materials for batteries, can produce vastly different emissions profiles.
This graphic from Wood Mackenzie shows how nickel and lithium mining can significantly impact the environment, depending on the processes used for extraction.
Nickel Emissions Per Extraction Process
Nickel is a crucial metal in modern infrastructure and technology, with major uses in stainless steel and alloys. Nickel’s electrical conductivity also makes it ideal for facilitating current flow within battery cells.
Today, there are two major methods of nickel mining:
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From laterite deposits, which are predominantly found in tropical regions. This involves open-pit mining, where large amounts of soil and overburden need to be removed to access the nickel-rich ore.
-
From sulphide ores, which involves underground or open-pit mining of ore deposits containing nickel sulphide minerals.
Although nickel laterites make up 70% of the world’s nickel reserves, magmatic sulphide deposits produced 60% of the world’s nickel over the last 60 years.
Compared to laterite extraction, sulphide mining typically emits fewer tonnes of CO2 per tonne of nickel equivalent as it involves less soil disturbance and has a smaller physical footprint:
Ore Type | Process | Product | Tonnes of CO2 per tonne of Ni equivalent |
---|---|---|---|
Sulphides | Electric / Flash Smelting | Refined Ni / Matte | 6 |
Laterite | High Pressure Acid Leach (HPAL) | Refined Ni / Mixed Sulpide Precipitate / Mixed Hydroxide Precipitate | 13.7 |
Laterite | Blast Furnace / RKEF | Nickel Pig Iron / Matte | 45.1 |
Nickel extraction from laterites can impose significant environmental impacts, such as deforestation, habitat destruction, and soil erosion.
Additionally, laterite ores often contain high levels of moisture, requiring energy-intensive drying processes to prepare them for further extraction. After extraction, the smelting of laterites requires a significant amount of energy, which is largely sourced from fossil fuels.
Although sulphide mining is cleaner, it poses other environmental challenges. The extraction and processing of sulphide ores can release sulphur compounds and heavy metals into the environment, potentially leading to acid mine drainage and contamination of water sources if not managed properly.
In addition, nickel sulphides are typically more expensive to mine due to their hard rock nature.
Lithium Emissions Per Extraction Process
Lithium is the major ingredient in rechargeable batteries found in phones, hybrid cars, electric bikes, and grid-scale storage systems.
Today, there are two major methods of lithium extraction:
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From brine, pumping lithium-rich brine from underground aquifers into evaporation ponds, where solar energy evaporates the water and concentrates the lithium content. The concentrated brine is then further processed to extract lithium carbonate or hydroxide.
-
Hard rock mining, or extracting lithium from mineral ores (primarily spodumene) found in pegmatite deposits. Australia, the world’s leading producer of lithium (46.9%), extracts lithium directly from hard rock.
Brine extraction is typically employed in countries with salt flats, such as Chile, Argentina, and China. It is generally considered a lower-cost method, but it can have environmental impacts such as water usage, potential contamination of local water sources, and alteration of ecosystems.
The process, however, emits fewer tonnes of CO2 per tonne of lithium-carbonate-equivalent (LCE) than mining:
Source | Ore Type | Process | Tonnes of CO2 per tonne of LCE |
---|---|---|---|
Mineral | Spodumene | Mine | 9 |
Mineral | Petalite, lepidolite and others | Mine | 8 |
Brine | N/A | Extraction/Evaporation | 3 |
Mining involves drilling, blasting, and crushing the ore, followed by flotation to separate lithium-bearing minerals from other minerals. This type of extraction can have environmental impacts such as land disturbance, energy consumption, and the generation of waste rock and tailings.
Sustainable Production of Lithium and Nickel
Environmentally responsible practices in the extraction and processing of nickel and lithium are essential to ensure the sustainability of the battery supply chain.
This includes implementing stringent environmental regulations, promoting energy efficiency, reducing water consumption, and exploring cleaner technologies. Continued research and development efforts focused on improving extraction methods and minimizing environmental impacts are crucial.
Sign up to Wood Mackenzie’s Inside Track to learn more about the impact of an accelerated energy transition on mining and metals.
Electrification
Life Cycle Emissions: EVs vs. Combustion Engine Vehicles
We look at carbon emissions of electric, hybrid, and combustion engine vehicles through an analysis of their life cycle emissions.

Life Cycle Emissions: EVs vs. Combustion Engine Vehicles
According to the International Energy Agency, the transportation sector is more reliant on fossil fuels than any other sector in the economy. In 2021, it accounted for 37% of all CO2 emissions from end‐use sectors.
To gain insights into how different vehicle types contribute to these emissions, the above graphic visualizes the life cycle emissions of battery electric, hybrid, and internal combustion engine (ICE) vehicles using Polestar and Rivian’s Pathway Report.
Production to Disposal: Emissions at Each Stage
Life cycle emissions are the total amount of greenhouse gases emitted throughout a product’s existence, including its production, use, and disposal.
To compare these emissions effectively, a standardized unit called metric tons of CO2 equivalent (tCO2e) is used, which accounts for different types of greenhouse gases and their global warming potential.
Here is an overview of the 2021 life cycle emissions of medium-sized electric, hybrid and ICE vehicles in each stage of their life cycles, using tCO2e. These numbers consider a use phase of 16 years and a distance of 240,000 km.
Battery electric vehicle | Hybrid electric vehicle | Internal combustion engine vehicle | ||
---|---|---|---|---|
Production emissions (tCO2e) | Battery manufacturing | 5 | 1 | 0 |
Vehicle manufacturing | 9 | 9 | 10 | |
Use phase emissions (tCO2e) | Fuel/electricity production | 26 | 12 | 13 |
Tailpipe emissions | 0 | 24 | 32 | |
Maintenance | 1 | 2 | 2 | |
Post consumer emissions (tCO2e) | End-of-life | -2 | -1 | -1 |
TOTAL | 39 tCO2e | 47 tCO2e | 55 tCO2e |
While it may not be surprising that battery electric vehicles (BEVs) have the lowest life cycle emissions of the three vehicle segments, we can also take some other insights from the data that may not be as obvious at first.
- The production emissions for BEVs are approximately 40% higher than those of hybrid and ICE vehicles. According to a McKinsey & Company study, this high emission intensity can be attributed to the extraction and refining of raw materials like lithium, cobalt, and nickel that are needed for batteries, as well as the energy-intensive manufacturing process of BEVs.
- Electricity production is by far the most emission-intensive stage in a BEVs life cycle. Decarbonizing the electricity sector by implementing renewable and nuclear energy sources can significantly reduce these vehicles’ use phase emissions.
- By recycling materials and components in their end-of-life stages, all vehicle segments can offset a portion of their earlier life cycle emissions.
Accelerating the Transition to Electric Mobility
As we move toward a carbon-neutral economy, battery electric vehicles can play an important role in reducing global CO2 emissions.
Despite their lack of tailpipe emissions, however, it’s good to note that many stages of a BEV’s life cycle are still quite emission-intensive, specifically when it comes to manufacturing and electricity production.
Advancing the sustainability of battery production and fostering the adoption of clean energy sources can, therefore, aid in lowering the emissions of BEVs even further, leading to increased environmental stewardship in the transportation sector.
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