One hundred and eight dollars per kilowatt-hour. That much, or rather that little, buys a lithium-ion battery pack around the world today: an all-time low and 8 percent less than in 2024, according to BloombergNEF. The figure is striking not only because it marks a record, but because it comes in a year when lithium and cobalt have reared their heads again. Yet the curve still went down. How? With a mixture of overcapacity, fierce competition and a chemistry shift that has reshaped the industry’s hierarchies.
The prime mover is in China, where factories have long been churning out more cells than domestic demand absorbs. The glut has translated into aggressive pricing and a race to the bottom that has made the most noise in stationary storage: grid storage bundles are down to $70/kWh in 2025, 45% less on an annual basis. For the first time, this segment becomes the cheapest, ahead of the car, and is a powerful signal for projects that need to support grid integration of renewables.
Breached a psychological threshold
The second factor is the spread of LFP, lithium-iron-phosphate: less expensive, more thermally stable, now produced on a large scale mainly by Chinese players. On average, LFP packs stop at $81/kWh, compared to $128/kWh for NMCs, the nickel-manganese-cobalt that remains preferred where energy density and power count. The transition to LFPs, along with long-term supply contracts and more mature hedging strategies, has cushioned the impact of rising commodity prices, including risks on lithium assets in China and new quotas on cobalt exports to the Democratic Republic of Congo.
In transportation, battery electric vehicles consolidate breaking through a psychological threshold: $99/kWh for the pack, for the second year under a hundred. This is the level that brings the total cost of ownership of electric closer to that of combustion vehicles, especially in the mid-range and where incentives and production scale count. The dynamics are not uniform and reflect different needs: long life cycles and cost per cycle push toward LFP in buses, light trucks, and fleets; density and performance hold room for NMC in premium models and high range applications.
The steepest decline
Geographies remain distant. In China, parcels cost an average of $84/kWh, thanks to integrated supply chains and saturated plants. In North America and Europe, prices are 44% and 56% higher, respectively, aided by the cost of local production and the premium paid for imports over Chinese price lists. In 2025, the steepest decline accrued in China itself (-13% real), while the United States and Europe experienced smaller declines (-4% and -8%). In Europe, the descent accelerated also due to the U.S. political and tariff framework: with barriers raised in the U.S., many Chinese companies redirected volumes to the Old Continent, adopting a more aggressive pricing policy to hit annual targets. The result: tighter competition and a new floor for European listings.
For BNEF, led in this dossier by Evelina Stoikou, it is a key shift: “cut-throat” competition is making batteries cheaper year after year and opening a window to reduce the cost of electric vehicles while accelerating the deployment of grid storage. The effect is not just industrial: the price of the pack weighs directly on the business plans of large storage companies that need to stabilize electricity generation that is increasingly dependent on sun and wind. If the cost goes down, more projects become bankable, the levelized cost of stored energy is reduced, and the scope of applications, from short-term balancing to regulation services, is broadened.
The short-term scenario
The near-term scenario remains favorable. Despite upward pressures on metals, BNEF expects a further decline in 2026, driven by low-cost LFP and manufacturing efficiencies that continue to improve. Further ahead, the trajectory will depend on the ability to invest in research and processes: silicon or lithium metal anodes, solid electrolytes, new cathode materials, innovative manufacturing methods. These are the ingredients of the next wave of reductions, along with wider and more resilient supply chains.
However, a delicate balance remains. Overcapacity drives plant saturation and squeezes margins; standardization accelerates learning but exposes to commodity cycles and regulatory backlash. 2025 showed surprising resilience: despite more expensive lithium and cobalt, end prices fell. The challenge for operators will be to continue the race for efficiency without sacrificing quality and safety, while diversifying supply to reduce vulnerability to geopolitical shocks.
