The cost of Li-ion batteries has plunged some 97% since their introduction three decades ago—a rate similar to the drop in solar panel prices. A team at MIT has analyzed what has accounted for the extraordinary savings and found that by far the biggest single factor was work on research and development, particularly in chemistry and materials science. This outweighed the gains achieved through economies of scale, although that turned out to be the second-largest category of reductions.

Contributions of public and private research and development to cell-level cost decline between the late 1990s and early 2010s. The top bar depicts the contribution of multiple types of R&D while the bottom bar depicts the contribution of R&D factors that were heavily influenced by chemistry and materials science research, including both materials synthesis and processing. Ziegler et al.

Their findings are published in an open-access paper in the RSC journal Energy and Environmental Science. The findings could be useful for policymakers and planners to help guide spending priorities in order to continue the pathway toward ever-lower costs for this and other crucial energy storage technologies, according to corresponding author Jessika Trancik, a professor in MIT’s Institute for Data, Systems and Society. Their work suggests that there is still considerable room for further improvement in electrochemical battery technologies, she says.

The contributions of high-level mechanisms to the cost decline of 18650-sized lithium-ion battery cells between the late 1990s and early 2010s. The total change in cost is measured in units of USD W⁻¹ h⁻¹ while cost change contributions are expressed as percentages of this total cost change. Public and private R&D comprises changes that require laboratory settings or non-routine production activities (e.g. pilot-scale manufacturing), while learning-by-doing includes improvements that result from repeated manufacturing activity at commercial scale. Economies of scale comprises cost changes that result from increasing plant sizes and purchasing volumes. Ziegler et al.

The analysis required digging through a variety of sources, since much of the relevant information consists of closely held proprietary business data. The researchers looked at academic articles, industry and government reports, press releases, specification sheets and legal filings, says MIT postdoc Micah Ziegler. Ziegler says the team collected about 15,000 qualitative and quantitative data points, across 1,000 individual records from approximately 280 references.

The findings about the importance of investment in R&D were especially significant, Ziegler says, because much of this investment happened after lithium-ion battery technology was commercialized, a stage at which some analysts thought the research contribution would become less significant.

Over roughly a 20-year period starting five years after the batteries’ introduction in the early 1990s, he says, “most of the cost reduction still came from R&D. The R&D contribution didn’t end when commercialization began. In fact, it was still the biggest contributor to cost reduction.”

The study took advantage of an analytical approach that Trancik and her team initially developed to analyze the similarly precipitous drop in costs of silicon solar panels over the last few decades. They also applied the approach to understand the rising costs of nuclear energy.

This is really getting at the fundamental mechanisms of technological change. And we can also develop these models looking forward in time, which allows us to uncover the levers that people could use to improve the technology in the future.

—Jessika Trancik

One advantage of the methodology Trancik and her colleagues have developed, she says, is that it helps to sort out the relative importance of different factors when many variables are changing all at once, which typically happens as a technology improves. This can help provide guidance on public spending, private investments, and other incentives.

What are all the things that different decision makers could do? What decisions do they have agency over so that they could improve the technology, which is important in the case of low-carbon technologies, where we’re looking for solutions to climate change and we have limited time and limited resources? The new approach allows us to potentially be a bit more intentional about where we make those investments of time and money.

—Jessika Trancik

Resources

• Micah S. Ziegler, Juhyun Song and Jessika E. Trancik (2021) “Determinants of lithium-ion battery technology cost decline” Energy Environ. Sci. doi: 10.1039/D1EE01313K