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
Charted: Battery Capacity by Country (2024-2030)
This graphic compares battery capacity by cathode type across major countries.
Charted: Battery Capacity by Country (2024-2030)
As the global energy transition accelerates, battery demand continues to soar—along with competition between battery chemistries.
According to the International Energy Agency, in 2024, electric vehicle sales rose by 25% to 17 million, pushing annual battery demand past 1 terawatt-hour (TWh)—a historic milestone.
This graphic, using exclusive data from Benchmark Mineral Intelligence (as of February 2025), compares battery capacity by cathode type across major countries. It focuses on the two dominant chemistries: Nickel Cobalt Manganese (NCM) and Lithium Iron Phosphate (LFP).
Understanding Cathode Chemistries
Batteries store and release energy through the movement of lithium ions. The cathode—a key electrode—determines a battery’s cost, range, and thermal performance.
NCM
- Offers higher energy density and better performance in cold climates, but is more expensive and has a shorter lifespan.
LFP
- Known for its lower cost and improved thermal stability, though it delivers a shorter driving range and adds weight.
As of now, LFP cathodes make up 40% of the EV market in terms of gigawatt-hours (GWh).
Beyond passenger vehicles, LFP batteries are widely used in systems that undergo frequent charging and discharging—like residential and grid-scale energy storage—where added weight isn’t a major concern. They’re also ideal for daily-use applications such as buses and delivery fleets.
Regional Market Trends
In China, LFP is already dominant, accounting for 64% of the market in 2024. By 2030, that figure is projected to grow to 76%, driven by a focus on affordability in the world’s largest EV market. Notably, over 70% of all EV batteries ever manufactured have been produced in China, contributing to deep manufacturing expertise.
| Region/Country | Year | % NCM | % LFP | % Other |
|---|---|---|---|---|
| China | 2024 | 27% | 64% | 8% |
| North America | 2024 | 71% | 7% | 22% |
| Europe | 2024 | 69% | 8% | 24% |
| South Korea | 2024 | 62% | 4% | 35% |
| Japan | 2024 | 58% | 0% | 42% |
Outside of China, NCM remains the leading chemistry due to consumer demand for longer range and premium performance.
North America – NCM holds a 71% share in 2024, with a slight decline to 69% forecasted for 2030.
Europe – NCM’s share is expected to grow from 69% in 2024 to 71% by 2030.
South Korea and Japan – Both countries show similar trends, with NCM gaining share as LFP remains limited or absent.
Electrification
Top 20 Countries by Battery Storage Capacity
China holds about two-thirds of global BESS capacity.
Visualizing the Top 20 Countries by Battery Storage Capacity
Over the past three years, the Battery Energy Storage System (BESS) market has been the fastest-growing segment of global battery demand. These systems store electricity using batteries, helping stabilize the grid, store renewable energy, and provide backup power.
In 2024, the market grew by 52%, compared to 25% growth in the EV battery market. Among the top companies in the BESS market are technology giants such as Samsung, LG, BYD, Panasonic, and Tesla.
This graphic highlights the top 20 BESS markets by current and planned grid capacity in gigawatt hour (GWh), based on exclusive data from Rho Motion as of February 2025.
Chinese Dominance
As with the EV market, China currently dominates global BESS deployments, accounting for approximately two-thirds of installed capacity. However, other markets are expected to grow significantly in the coming years, driven by low-cost lithium-ion cells and the expansion of renewable energy capacity.
Currently, China has 215.5 GWh of installed capacity and an ambitious 505.6 GWh project pipeline. The U.S. follows with 82.1 GWh installed and 162.5 GWh planned.
| Top BESS Markets | Installed 2024 (GWh) | 2027P |
|---|---|---|
| 🇨🇳 China | 215.5 | 721.2 |
| 🇺🇸 USA | 82.1 | 244.6 |
| 🇬🇧 UK | 7.5 | 56.3 |
| 🇦🇺 Australia | 5.6 | 102.9 |
| 🇨🇱 Chile | 3.8 | 41.0 |
| 🇮🇹 Italy | 2.2 | 7.9 |
| 🇸🇦 Saudi Arabia | 1.3 | 32.4 |
| 🇿🇦 South Africa | 1.3 | 9.4 |
| 🇮🇪 Ireland | 1.6 | 2.5 |
| 🇵🇭 Philippines | 1.0 | 6.1 |
| 🇯🇵 Japan | 1.0 | 5.0 |
| 🇩🇪 Germany | 1.0 | 6.2 |
| 🇰🇷 South Korea | 1.1 | 1.3 |
| 🇮🇱 Israel | 0.8 | 4.6 |
| 🇫🇷 France | 0.6 | 1.8 |
| 🇧🇪 Belgium | 0.7 | 5.3 |
| 🇺🇿 Uzbekistan | 0.6 | 5.9 |
| 🇸🇪 Sweden | 0.6 | 1.5 |
| 🇮🇳 India | 0.5 | 4.3 |
| 🇨🇦 Canada | 0.3 | 18.3 |
Canada is projected to be the fastest-growing market through 2027, with its cumulative capacity hitting 18.3 GWh—a significant increase from its current 0.3 GWh capacity.
Countries such as Australia (97.3 GWh pipeline), Saudi Arabia (31.1 GWh), and Chile (37.2 GWh) have relatively small current installations but plan substantial expansions. Within Europe, the UK leads with 7.5 GWh of installed capacity and 48.7 GWh in the pipeline, while Italy, Germany, France, and Belgium show steady but more modest growth.
Despite being technological leaders, Japan (4 GWh pipeline) and South Korea (0.3 GWh) have relatively low planned BESS expansions.
According to Rho Motion, China will remain the dominant player in 2027, but its share of the total market is expected to decline to just over 50% based on the current project pipeline.
While the BESS market is expanding, challenges remain, including grid connection bottlenecks and the development of revenue streams in emerging markets.
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