has already managed to lower the price of batteries to its historical low

More than 60% of electric cars sold in China are already cheaper than their gasoline equivalents. And without applying any state aid. A goal that seemed difficult to achieve but that has been achieved by the country where the most electric cars are sold.

The key has always been the battery, its most expensive element and which drives up the price of an electric car compared to one with a combustion engine. But The price of batteries has been halved in just one year.

From $95/kWh to $53/kWh

According to a recent report by Bloomerglas lithium iron phosphate (LFP) batteries They now set their price, on average, at $53/kWhThis represents a 51% drop compared to July 2023. In September, prices had already dropped below the $100/kWh mark, and throughout last year they were set at $95 per kWh.

Putting it in context, a decade ago lithium ion batteriesalthough more expensive, had a much higher average price: $732/kWh. By 2022, this had dropped to $151 per kWh. This, when transferred to the price of the battery itself, means an average of $36,600 and $7,550 respectively.

How have batteries become so cheap? Bloomberg gives several reasons for this significant drop in battery prices over the last year. The first is that the cost of raw materials has been reduced remarkably: at the beginning of 2023 it was half the price of the battery and now it has dropped to less than 30%.

But also that China has overcapacity of production: China produces more batteries than the market demands. This has led manufacturers to adjust their prices to maintain their market share. Remember that China practically monopolizes battery production, as well as the entire process itself.

Finally, the leading battery manufacturers, CATL and BYD, continue to improve their manufacturing processes, reducing costs and making them more profitable thanks to more modern and automated factories. The biggest beneficiary has been the electric car in the People’s Republic.

Electric cars cheaper than gasoline cars, something we will see in Europe for a while

As of today, according to Bloomberg analysis, 64% of electric cars in China are cheaper than their gasoline equivalentIn 2023, they were almost on par, although thermal cars were still cheaper: their average cost was set at around 29,500 euros at the exchange rate.

Aside from batteries, China remains the exception when it comes to small, affordable electric cars: Around 50 models there have a price below 14,000 euros.Far from changing, this trend will increase: more cheap electric vehicles are expected to be launched on the market between 2025 and 2026.

However, according to Bloomberg, This will take time to be seen in Europewhere Electric cars usually start at an average of 40,000 euros: few go below 30,000 euros.

But in China, the same model that is sold here is much cheaper in its home market. For example, WORLD To him In Spain it starts above the 41.000 euros while the Yuan Plus, the name under which it is marketed There, it costs just over 21,000 euros.. It’s almost half.

This is due to export costs and a more friendly tax system: electric vehicles are already VAT-free in China, as are PHEVs. In other words, we have to add the tariffs, which are now higher with the application of the new rates to electric vehicles exported from the Asian country, and the taxes here, which are higher. In Spain, VAT is set at 21% and in Germany, for example, it is 19%.

Although they cost twice as much, it is also because The same model sold in Europe has more equipmentwhich raises its price. All due to brand positioning, as the Chinese companies seek to compete head-to-head with Tesla.

Today, in Spain, we have few electric cars that cost less than 25,000 euros before aid, most of them new to the market. For example, the Citroën ë-C3 starts at 25,000 euros. 22.590 euros with the current offer or the Opel Frontera Electric does the same at 24,500 euros. The cheapest version of the Renault 5 E-Tech, which will arrive next year, will start at 24,900 euros. Even so, the Citroën C3 gasoline starts in 14.990 euros.

All these models, by the way, are equipped with cheaper LFP batteries, which are precisely the ones that have seen such a significant drop in price. But the trade battle with Europe over the imposition of tariffs does not predict that their price will drop in the short term. They are temporary, but if they are applied on the same terms, China will retaliate. And for the moment we continue to depend on the People’s Republic for the supply of batteries.

Find your ideal electric car

If you’ve thought about buying an electric car, this will interest you. We have created the Personalised Electric Car Recommender, where, in addition to seeing the models that suit your needs, you will also have answers to the questions that may concern you the most, such as price, range or nearby charging points.