Lithium-ion batteries (LiBs) are pivotal in the shift towards electric mobility, having seen an 85 % reduction in production costs over the past decade. However, achieving even more significant cost reductions is vital to making battery electric vehicles (BEVs) widespread and competitive with internal combustion engine vehicles (ICEVs). Recent trends indicate a slowdown, including a slight cost increase in LiBs in 2022. This study employs a. Lithium-ion batteries (LiBs) are pivotal in the shift towards electric mobility, having seen an 85 % reduction in production costs over the past decade. However, achieving even more significant cost reductions is vital to making battery electric vehicles (BEVs) widespread and competitive with internal combustion engine vehicles (ICEVs). Recent trends indicate a slowdown, including a slight cost increase in LiBs in 2022. This study employs a high-resolution bottom-up cost model, incorporating factors such as manufacturing innovations, material price fluctuations, and cell performance improvements to analyze historical and projected LiB cost trajectories. Our research predicts potential cost reductions of 43.5 % to 52.5 % by the end of this decade compared to 2020. Furthermore, reaching cost parity between BEVs and ICEVs is expected in the latter half of this decade, contingent on a total installed capacity of 3500 to 4100 GWh.year−1 across giga-factories. The determinants influencing these cost reductions evolve over time, with historical significance placed on savings in cathode materials and anticipated future importance on minimizing scrap rates. This research offers valuable insights for policymakers and investors in the LiB industry, aiding informed decision-making.••••LiB costs could be reduced by around 50 % by 2030 despite recent metal price spikes.••Cost-parity between EVs and internal combustion engines may be achieved in the second half of this decade.••Improvements in scrap rates could lead to significant cost reductions by 2030.Lithium-ion batteryBottom-up cost modelingHistorical priceProjected priceSince the first commercialized lithium-ion battery cells by Sony in 1991, LiBs market has been continually growing. Today, such batteries are known as the fastest-growing technology for portable electronic devices and BEVs thanks to the competitive advantage over their lead-acid, nickel‑cadmium, and nickel-metal hybrid counterparts. Nevertheless, challenges such as low driving range, potential risk of thermal runaway, long charging times, high purchasing prices, and constraints in raw material supply chains hinder the dominance of BEVs over ICEVs [,,,,, ]. Tremendous ongoing technological advancements in various aspects of LiB have been able to diminish such challenges partly. For instance, the specific energy of lithium-ion battery cells has been enhanced from approximately 140 Wh.kg−1 to over 250 Wh.kg−1 in the last decade, resulting in a higher driving range for BEVs. Some models, e.g., Tesla, can travel up to 600 km on a single charge. Furthermore, recent innovations in the material of cooling systems, significant developments in the charging time, and better thermal management mechanisms are notable examples in favor of BEVs' enhancements.With regard to the LiB price, a decline of 97 % has been observed since their commercial introduction in 1991, as of 132 US$.kWh−1 at pack level. (approximately 99 US$.kWh−1 at cell level) for 2020. This could be regard. 2.1. Bottom-up cost model from process-based cost model (PBCM) perspectiveThe manufacturing process of a LiB cell requires a process model to establish a linkage between a set of interrelated complex steps to achieve a final product. In fact, the process model is fed by the product's final characteristics, and then the model satisfies the corresponding requirements for steps. There needs to be more than such a model to obtain an acceptable and cost-effective product since the operational parameters of each step within the manufacturing process of LiB vary from technology to technology and year to year. Driven by this, the process model demands merging with an operating model in which the operating conditions for each step can be controlled. Finally, these data are conveyed to a financial model whereby related resources and economic factors are specified, yielding the final price for the product. Fig. 1 indicates schematically the process-based cost model applied in this work.2.2. Prospective expansions in production volume of LiB plantsIncreasing the production volume in a LiB plant is an effective strategy for reducing production costs. This reduction is achieved through economies of scale, allowing for higher resource utilization in terms of machinery, labor, an.
