Why Are Lithium Batteries So Expensive To Make?

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why are lithium batteries so expensive to make

Table of Contents

Key Takeaways:

  • The cost of lithium batteries is influenced by factors including cell composition, battery management systems, custom pack design, and testing/certification.
  • Understanding these elements is crucial for effectively managing expenses and optimizing battery performance.

When individuals or businesses purchase battery packs, the expenses are a key point of focus.

In 2023, the average cost of an electric vehicle battery pack in 2023 is $128/kWh. This is significantly lower than the price back in 2008, which was $1,355/kWh. However, it’s worth noting that lithium batteries have consistently been on the higher end of battery chemistry costs.

The price of lithium batteries is influenced by a variety of elements. These include the cell itself, the battery management system (BMS), the overall battery pack system, testing and shipping costs.

Battery Cells

The individual battery cells represent about 80% of the total production expenses. A battery cell is composed of several parts: the cathode, anode, electrolyte, separator, and the outer casing.

Cathode materials and their production processes tend to be the costliest elements, with the costs of anodes and separators following closely behind.

The cathode primarily consists of lithium combined with either cobalt, nickel, or manganese, while graphite is typically used for the anode. The market prices for these materials can vary based on supply and demand, and the increasing demand for high-performance electronics and electric vehicles has resulted in a scarcity of these metals.

It’s anticipated that the availability of global resources will diminish by the year 2050. Issues such as heatwaves impacting lithium supplies in China and concerns related to cobalt mining practices in the Democratic Republic of Congo have raised both environmental and human rights issues.

Due to political unrest in certain regions, manufacturers in only a few countries have reliable access to large quantities of these materials, leading to potential supply chain disruptions.

As a result of these factors driving up costs, manufacturers are likely to increase cell prices in response.


The protection and charging mechanisms of lithium batteries significantly impact the manufacturing cost of battery packs.

In line with international regulations, all lithium-based batteries must be equipped with a BMS. This system is tasked with monitoring the battery’s state of charge (SoC) and its health status (SoH), safeguarding the battery from damage and extending its lifespan by preventing overcharging or excessive discharging.

The cost of BMS depends on the features customers require in their devices. Basic BMS units monitor SoC, SoH, and temperature. Advanced units may include battery balancing, real-time clocks, data loggers, and more. More features increase BMS costs. A clear understanding of the power requirements is essential for customers to determine the appropriate level of features to include in the BMS.

During the charging process, integrated circuits (ICs) within the battery charger are utilized. There are different types of ICs available, such as linear chargers and switch-mode chargers. These ICs not only charge the battery but also provide protection against overvoltage and overcurrent.

The expense associated with battery chargers is dependent on whether customers prefer to have chargers included with the battery pack for immediate use or allow end-users to select their own chargers. The choice between custom and standard chargers also affects the cost, with custom chargers typically being more expensive.

Custom Battery Pack System

The battery pack system is composed of a battery enclosure and a variety of components, including wiring harnesses, relays, connectors, BMS software, and thermal management systems for heating and cooling. These components ensure the stable power supply of lithium batteries to various devices.

While wiring harnesses, connectors, and BMS are standard components, other elements are tailored to meet the specific needs of different applications.

In the process of designing a custom battery pack system, adding extra components will proportionally increase manufacturing costs.

It is also important to note that substituting certain components with lower-cost materials (such as relays) may affect overall performance and battery lifespan. Customers should consider the balance between the design and manufacturing costs of the battery pack system and its performance and quality.

In some instances, choosing a higher-quality battery pack system, despite the higher upfront costs, can result in long-term savings due to the enhanced durability of the battery.

Testing And Shipping

Lithium battery pack manufacturers must certify lithium battery packs for safety before transport.

Some certifications, like CE, are done in-house; others require external labs. Costs range from $500 to $30,000, depending on the certification type. Sample packs are needed for both destructive and non-destructive tests.

Redesign may be needed if tests fail, increasing costs as new designs must be certified too. Switching manufacturers, even with the same design, may demand retesting and recertification. Customers should always budget for lithium battery testing, certification, and transport requirements.


Currently, the design and production costs of lithium batteries are higher than those of other types of chemical batteries.

However, with ongoing technological advancements, manufacturers are actively working to make these chemical compositions more cost-effective without compromising the power they provide to various devices.

For those looking to customize battery packs and chargers, understanding the precise power demands of their applications is crucial. Providing manufacturers with comprehensive documentation during the design phase can lead to more cost-effective solutions. Engaging manufacturers from the outset of the design process can also help mitigate manufacturing challenges and reduce waste, ultimately leading to more cost-effective outcomes.