The looming concern over the high cost of replacing EV batteries is a significant issue for potential car buyers. However, according to a recent analysis by battery assessment company Recurrent, this may not remain a major worry for much longer.
Recurrent, a firm that specializes in generating battery health reports for pre-owned EVs, anticipates that the plummeting prices of new batteries will make swapping out a battery pack more economical than fixing a traditional gasoline engine by the end of the decade.
2025 Hyundai Ioniq 5
Whether it’s a gasoline engine, a battery pack, or any other component, repairs become financially impractical if they surpass the value of the vehicle. Recurrent indicates that battery replacement costs are already moving away from that scenario. Currently, they account for 75% of the value of a $15,000 used car, a decrease from 100% in 2020. The company predicts that by 2030, battery replacements will only represent 30% of the value of a $15,000 pre-owned vehicle.
This shift is primarily driven by the decreasing costs of new EV batteries. As highlighted by Recurrent, Goldman Sachs foresees that average battery prices will hit $80 per kwh by 2026, which is nearly 50% lower than in 2023. With the exception of a price surge in 2022 due to elevated raw material costs, this downward trend has been consistent since the inception of the modern EV era. The U.S. Department of Energy estimates a 90% drop in EV battery costs since 2008.
2025 Kia EV6
Recurrent expects these trends to persist, envisioning a thriving market for second-hand EV batteries by 2030. This could enable owners to offset a portion of the replacement cost by selling their used battery packs for applications like stationary energy storage. The company predicts that this could reduce the effective price of new packs by $10-$20 per kwh.
Lower costs not only make pre-owned EVs more accessible but could also prolong their lifespan. A study from 2023 revealed that replacing battery packs is more common than repairing them. At current battery prices, this could result in relatively new vehicles being deemed a total loss by insurance companies for minor damages, leading to higher insurance premiums for those that are still operational.