The average cost of a lithium-ion (Li-ion) battery cell – key for the price of electric vehicles (EVs) – is forecast to fall below the threshold of $100/kWh by 2023, and then on to as low as $73/kWh in 2030, IHS Markit said.

The expected decline comes after the average price for Li-ion battery cells has already fallen 82% from 2012-20, according to the analyst group. By 2023, the cost of Li-ion batteries will thus have plunged by $580/kWh, or 86%, in a decade.

“Progress in growing the share of low-carbon generation, such as solar and wind, in the global power mix also brings a particular set of challenges – namely intermittency,” said Sam Wilkinson, associate director, clean technology and renewables, at IHS Markit.

“Improving cost-effectiveness of energy storage, particularly batteries, will be key to providing needed flexibility to balance this supply of electricity with demand.”

Further reductions in battery prices are also key for increasing the competitiveness and wider adoption of electric transport and grid storage.

EV pioneer Tesla during its ‘Battery Day’ event earlier this week had announced it will manufacture a new, simpler ‘tabless’ battery, which chief executive Elon Musk promised will increase the range of Tesla cars while at the same time pushing down prices. The company hopes to be able to offer EVs at $25,000 apiece eventually, although Musk didn’t reveal a projected date.

IHS Markit expects that the biggest contributor to falling battery cell prices in the next decade will be reductions in manufacturing costs through larger factory sizes and improving economies of scale. Reductions in material costs by improving efficiencies and adopting lower cost cathode compositions, and improvements in battery energy density are also expected to play a role.

“Technology advances and competition between the different types of Li-ion batteries is driving prices down,” said senior IHS Markit clean energy tech analyst Youmin Rong.

“Ultimately, the two major growth markets—transportation and electric grid storage—depend upon lower costs to make batteries more competitive with the internal combustion engine and fossil fuel power generation.”

IHS adds that the price of Li-ion battery cells based on LPF (iron phosphate) has already fallen below $100/kWh, while that of NMC (nickel manganese cobalt) and of NCA (nickel cobalt aluminum) cells is also expected to be below the $100/kWh threshold by 2024.