EV battery prices drop by 74% in five years

February 05, 2025

From the newsletter

Electric vehicle (EV) batteries are now 74% cheaper than they were five years ago. This decline is expected to lower the price of EVs not only in Africa but also globally, as the continent develops its local battery supply chain. Africa holds 30% of the world’s critical minerals, which are essential components in the manufacturing of EV batteries.

  • Although the price drop has been steady since 2015, when 1 kWh was retailing at $463, BloombergNEF projects it will fall further from the current $97/kWh to below $80/kWh by 2026.

  • However, Chinese original equipment manufacturers (OEMs) such as BYD and CATL currently retail batteries for as low as $56/kWh. These companies command more than 53% of the global EV battery market, and most EVs in Africa rely on their energy storage technology.

More details

  • BloombergNEF forecasts continued battery cost reductions, driven by economies of scale, increased competition, and technological advancements such as lithium-iron-phosphate (LFP) batteries.

  • As battery costs account for between 7.5% and 33% of an EV’s total price, their decline will bring EVs closer to price parity with internal combustion engine (ICE) vehicles. China has already achieved cost parity, whereas high import duties and logistical expenses still make EVs more expensive in Africa.

  • Africa's hidden potential is lying beneath its ground due to abundance including lithium, cobalt, nickel, graphite, and manganese. The Democratic Republic of the Congo (DRC) leads in cobalt production, accounting for approximately 63% of global output. 

  • South Africa dominates manganese production, while Zimbabwe and Namibia possess significant lithium reserves. These resources provide Africa with a strategic advantage, enabling it to become a global EV battery production hub if local refining and manufacturing industries are developed.

  • African nations are transitioning from raw mineral exports to domestic battery manufacturing. Morocco, in collaboration with Chinese battery giants, has constructed a $2 billion gigafactory with a production capacity of 70 GWh per year—enough to power one million EVs. 

  • Ethiopia is leveraging its Qenticha lithium mine, which holds 110 million tonnes of lithium ore, to develop a domestic EV battery industry. Additionally, the DRC and Zambia have formed a regional EV battery value chain, while Nigeria and South Africa are jointly working on lithium processing.

  • Moreover, Ampersand, a leading African EV energy tech company, has partnered with BYD to scale up electric motorbike production, using BYD’s high-tech battery cells to manufacture 40,000 electric motorcycles by 2026.

  • Investors can capitalise on Africa’s cost-competitive environment, where battery mineral refining and processing are up to 40% cheaper than in other regions. Countries such as Tanzania and Morocco could produce lithium-ion batteries at $68-72/kWh—lower than Europe, even with subsidies. Africa’s EV market is expected to grow from $15.8 billion in 2024 to $25.4 billion by 2029. Early investments will provide long-term advantages as domestic manufacturing reduces reliance on imports and minimises geopolitical risks.

  • International collaboration is essential to the success of Africa’s battery industry. Morocco has secured agreements with Chinese firms to build gigafactories, while Ethiopia is exploring joint ventures with Western investors to exploit its lithium reserves.

  • Ampersand’s partnership with BYD is advancing battery-powered mobility in Africa. Meanwhile, Spiro, Africa’s largest EV manufacturer, has teamed up with U.S. battery recycling company Ace Green Recycling to establish battery recycling centres. This initiative reduces e-waste and enhances sustainability by incorporating recycled materials into new battery production. Such partnerships enable knowledge transfer, secure funding, and strengthen Africa’s position in the global EV economy.

  • Battery suppliers and EV manufacturers can engage with Africa’s evolving battery industry by establishing local production plants, forming joint ventures with African firms, and investing in battery recycling projects. Companies that capitalise on Africa’s rich mineral resources will benefit from lower production costs while contributing to job creation and economic growth. Policymakers should also encourage foreign direct investment through tax incentives, subsidies, and streamlined regulations to foster a business-friendly environment.

Our take

  • The African EV and battery industry is in its infancy, presenting an opportunity for early movers to secure key positions in the supply chain. Localisation of battery production will drastically lower EV prices in Africa, making them accessible to the masses. By reducing reliance on imported batteries, African nations can cut down production costs, making EVs a viable alternative to combustion-engine vehicles.

  • Africa’s EV battery sector presents a unique opportunity for investors and manufacturers to capitalise on an emerging market. With critical minerals in abundance, the continent can establish itself as a global competitor in battery production, challenging Chinese and Western dominance.

  • African Continental Free Trade Area (AfCFTA) offers a unified market, facilitating cross-border investments in EV battery production and mineral processing.