EV battery prices have been falling, and they could decline even more steeply over the next two years, according to a new Goldman Sachs report.

On the pack level, global average battery prices declined from $153 per kwh in 2022 to $149 in 2023, according to the report, which predicts that they’ll continue dropping to $80 per kwh by 2026. That’s almost 50% lower than 2023, and past the point where EVs achieve price parity with gasoline cars, analysts estimate.

Analysts attribute continually-decreasing battery prices to two main factors. One is technological advancements, specifically larger cells and cell-to-pack tech that lower the number of battery modules or eliminate them completely. This could help not only lower costs, but achieve up to 30% higher energy density that could keep battery-pack size in check, analysts believe. Tesla has moved to produce its own large-format 4680 cells, but has had trouble keeping manufacturing costs of those cells down.

The other factor is a downturn in the prices of raw materials like lithium and cobalt. Higher raw-material prices contributed to soaring EV battery costs in 2022, but that’s declining and will continue to decline through at least 2030, representing about 40% of anticipated battery cost reductions, according to Goldman Sachs.

Comparing 4680 vs. 2170 – Panasonic

This follows another report from Goldman Sachs earlier this year predicting a 40% drop in EV battery costs between 2023 and 2025, which analysts said could boost sales, potentially allowing EVs to claim 50% of the U.S. market by 2030.

Despite the blip of pandemic-adjacent supply-chain issues, EV battery prices have steadily decreased since the modern EV era kicked off with the arrival of the Tesla Roadster about 15 years ago. Prices have dropped 90% since that time, according to the U.S. Department of Energy.