The main drivers of these cost reductions include:
- Scaling advantages in capital-intensive production
- Significant technological advances, especially in increasing energy density (in kWh/kg)
- Advances in battery design and chemical composition (e.g. lithium-iron phosphate batteries and cell-to-pack technology)
Cost parity in sight
Research and the market assume that cost parity between EVs and vehicles with combustion engines – under otherwise identical conditions – would be achieved at battery costs of around USD 100 per kWh. As a result, EVs are expected to be cost-competitive in just a few years compared to vehicles with combustion engines, which should continue to fuel acceptance by the end customer and thus EV growth.
This growth is likely to be reflected in the earnings figures of large and well-known battery manufacturers such as a Contemporary Amperex Technology Corp., LG Energy Solution, BYD or Samsung SDI over the next few years.
Swisscanto Invest follows developments in the market and in battery technologies very closely and implements them in sustainable, global equity strategies, where appropriate, taking into account quality aspects (profitability, debt, etc.). At present, the focus of our investments is on the market leaders in battery production in the Asia-Pacific region.
Increasing mobility gives a boost to EVs
Constant cost reduction in battery manufacturing is an important factor in helping EVs to achieve a breakthrough. A second important factor is the increasing awareness in politics and society for the accelerated decarbonisation of the economy. The transport sector is known to be one of the largest emitters of CO2. For example, the recovery of the global economy and tourist travel in 2021 led to an increase in global CO2 emissions to 33 gigatonnes, bringing emissions back almost to 2019 levels after the decline in 2020. The transport sector accounts for almost a quarter, 8.2 gigatonnes (24%), of these emissions. Of these 8.2 gigatonnes, 45% are for passenger road transport alone and a further 29% for freight transport.
Global share of CO2 emissions in % by mode of transport