High power EV battery replacement cost is a big problem for new car buyers, but that won't be the case for long, according to battery analysis firm Recurrent.
Recurrent, which produces battery health reports for used EVs, predicts that a drop in the price of a new battery it will make replacing the battery pack cheaper than repairing the gasoline engine by the end of the decade.
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Whether it's the gasoline engine, the battery pack, or any other part, repairs don't make financial sense if they exceed the value of the car. Battery replacement costs are already trending up from that, according to Recurrent. They now represent 75% of the $15,000 used car price, down from 100% by 2020, the company estimates, adding that. in 2030 the battery replacement will be worth 30% of the $15,000 used car price.
This was made possible by falling costs of new EV batteries. As the general notes, Goldman Sachs predicted earlier this year that battery prices will reach $80 per kwh by 2026—about 50% below 2023. Apart from a bump in 2022 due to higher commodity prices, that has generally been the trend since then. the beginning of the modern EV era. The US Department of Energy has estimated that EV battery costs have fallen by 90% since 2008.
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Recurrent assumes that these trends will continue, and that by 2030 there will be an intensification market for used EV batteries which may allow owners to cover some of the replacement costs. The growth of so-called second-life applications such as static energy storage could allow EV owners to negotiate the sale of packs for their used vehicles, potentially lowering the effective price of new packs by $10-$20 per kwh, Recurrent predicts.
Lower costs could not only help make used EVs more affordable, but may also keep more in circulation. The 2023 report found that it is more common to replace battery packs than repair them, which, at current battery prices, results in new cars being “bundled” by insurance companies with less damage and higher insurance payments for the remaining ones.