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Companies are investing billions of dollars in battery facilities to meet growing demand. The cost of batteries essential for manufacturing electric vehicles has plummeted during the past decade, from about $1,400 per kilowatt hour to roughly $100 per kilowatt hour - enabled by a massive scaling-up of production. In 2019, a Volkswagen executive told the New York Times that the German automaker was paying less than $100 per kilowatt hour for batteries - a price generally accepted as the point where electric cars can start becoming more affordable than internal combustion models. Tesla was also reportedly on track to reach a cost of less than $100 per kilowatt hour as of 2018. Between 2010 and 2018, total battery demand grew by 30% annually, reaching a total volume of 180 gigawatt hours, according to a report published in 2019 by the Global Battery Alliance. The market is expected to continue growing by 25% annually until 2030, ultimately reaching a volume of 2,600 gigawatt hours, according to the report. The main drivers of demand growth: the electrification of transportation, and the deployment of batteries in electricity grids (by 2030, passenger cars will account for 60% of global battery demand, according to the report). Car and battery manufacturers have been establishing a growing number of production facilities, such as Tesla’s Gigafactory near Reno, Nevada in the US, which the carmaker jointly owns and operates with its battery supplier Panasonic. According to a 2019 media report, Tesla, which has indicated that a lack of available batteries from outside vendors has constrained its production, is also working on a means to manufacture its own battery cells. Northvolt, a Swedish battery maker, raised $1 billion in funding in 2019 from investors including Volkswagen and BMW in order to help it complete Europe’s biggest lithium-ion battery plant, at roughly the same time that Chinese battery cell manufacturer CATL (Contemporary Amperex Technology Co. Ltd.) disclosed plans to invest €1.8 billion in a production facility in Germany (more recently, CATL disclosed an agreement to supply batteries for Daimler trucks). This increase in production could help curb carbon emissions as it creates jobs. Increasing electric vehicle production may result in the creation of 10 million jobs, and about $150 billion in economic value as it contributes to progress related to the Paris Agreement on climate change, according to the Global Battery Alliance.

Battery Demand and Production

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Next Generation Batteries