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 EV Adoption Will Impact Oil Consumption (2015-2025P)
How much oil is saved by adding electric vehicles into the mix? We look at data from 2015 to 2025P for different types of EVs.

The EV Impact on Oil Consumption
As the world moves towards the electrification of the transportation sector, demand for oil will be replaced by demand for electricity.
To highlight the EV impact on oil consumption, the above infographic shows how much oil has been and will be saved every day between 2015 and 2025 by various types of electric vehicles, according to BloombergNEF.
How Much Oil Do Electric Vehicles Save?
A standard combustion engine passenger vehicle in the U.S. uses about 10 barrels of oil equivalent (BOE) per year. A motorcycle uses 1, a Class 8 truck about 244, and a bus uses more than 276 BOEs per year.
When these vehicles become electrified, the oil their combustion engine counterparts would have used is no longer needed, displacing oil demand with electricity.
Since 2015, two and three-wheeled vehicles, such as mopeds, scooters, and motorcycles, have accounted for most of the oil saved from EVs on a global scale. With a wide adoption in Asia specifically, these vehicles displaced the demand for almost 675,000 barrels of oil per day in 2015. By 2021, this number had quickly grown to 1 million barrels per day.
Let’s take a look at the daily displacement of oil demand by EV segment.
Number of barrels saved per day, 2015 | Number of barrels saved per day, 2025P | |
---|---|---|
Electric Passenger Vehicles | 8,600 | 886,700 |
Electric Commercial Vehicles | 0 | 145,000 |
Electric Buses | 43,100 | 333,800 |
Electric Two & Three-Wheelers | 674,300 | 1,100,000 |
Total Oil Barrels Per Day | 726,000 | 2,465,500 |
Today, while work is being done in the commercial vehicle segment, very few large trucks on the road are electric—however, this is expected to change by 2025.
Meanwile, electric passenger vehicles have shown the biggest growth in adoption since 2015.
In 2022, the electric car market experienced exponential growth, with sales exceeding 10 million cars. The market is expected to continue its strong growth throughout 2023 and beyond, eventually coming to save a predicted 886,700 barrels of oil per day in 2025.
From Gas to Electric
While the world shifts from fossil fuels to electricity, BloombergNEF predicts that the decline in oil demand does not necessarily equate to a drop in oil prices.
In the event that investments in new supply capacity decrease more rapidly than demand, oil prices could still remain unstable and high.
The shift toward electrification, however, will likely have other implications.
While most of us associate electric vehicles with lower emissions, it’s good to consider that they are only as sustainable as the electricity used to charge them. The shift toward electrification, then, presents an incredible opportunity to meet the growing demand for electricity with clean energy sources, such as wind, solar and nuclear power.
The shift away from fossil fuels in road transport will also require expanded infrastructure. EV charging stations, expanded transmission capacity, and battery storage will likely all be key to supporting the wide-scale transition from gas to electricity.
Electrification
Graphite: An Essential Material in the Battery Supply Chain
Graphite represents almost 50% of the materials needed for batteries by weight, no matter the chemistry.

Graphite: An Essential Material in the Battery Supply Chain
The demand for lithium-ion (Li-ion) batteries has skyrocketed in recent years due to the increasing popularity of electric vehicles (EVs) and renewable energy storage systems.
What many people don’t realize, however, is that the key component of these batteries is not just lithium, but also graphite.
Graphite represents almost 50% of the materials needed for batteries by weight, regardless of the chemistry. In Li-ion batteries specifically, graphite makes up the anode, which is the negative electrode responsible for storing and releasing electrons during the charging and discharging process.
To explore just how essential graphite is in the battery supply chain, this infographic sponsored by Northern Graphite dives into how the anode of a Li-ion battery is made.
What is Graphite?
Graphite is a naturally occurring form of carbon that is used in a wide range of industrial applications, including in synthetic diamonds, EV Li-ion batteries, pencils, lubricants, and semiconductor substrates.
It is stable, high-performing, and reusable. While it comes in many different grades and forms, battery-grade graphite falls into one of two classes: natural or synthetic.
Natural graphite is produced by mining naturally occurring mineral deposits. This method produces only one to two kilograms of CO2 emissions per kilogram of graphite.
Synthetic graphite, on the other hand, is produced by the treatment of petroleum coke and coal tar, producing nearly 5 kg of CO2 per kilogram of graphite along with other harmful emissions such as sulfur oxide and nitrogen oxide.
A Closer Look: How Graphite Turns into a Li-ion Battery Anode
The battery anode production process is composed of four overarching steps. These are:
- Mining
- Shaping
- Purifying
- Coating
Each of these stages results in various forms of graphite with different end-uses.
For instance, the micronized graphite that results from the shaping process can be used in plastic additives. On the other hand, only coated spherical purified graphite that went through all four of the above stages can be used in EV Li-ion batteries.
The Graphite Supply Chain
Despite its growing use in the energy transition all around the world, around 70% of the world’s graphite currently comes from China.
With scarce alternatives to be used in batteries, however, achieving supply security in North America is crucial, and it is using more environmentally friendly approaches to graphite processing.
With a lower environmental footprint and lower production costs, natural graphite serves as the anode material for a greener future.
Click here to learn more about how Northern Graphite plans to build the largest Battery Anode Material (BAM) plant in North America.
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