The single biggest variable in an electric vehicle's cost competitiveness is the battery. The battery pack price pushes down the total-cost-of-ownership (TCO) boundary against internal-combustion (ICE) cars, determining which vehicle classes and regions make a BEV rational. BNEF's end-2025 data shows that boundary is moving steadily.
In 2025, lithium-ion battery pack prices fell 8% year-on-year to USD 108/kWh, a record low. By application, BEV packs came in at USD 99/kWh, below the USD 100 threshold for a second consecutive year. By chemistry, LFP (lithium iron phosphate) was USD 81 and NMC (nickel manganese cobalt) was USD 128.
Three Structural Drivers of the Decline
Notably, this decline happened while battery-metal prices were rising. The reason pack prices fell despite costlier raw materials is structural.
Cell manufacturing overcapacity
Cell production capacity additions outran demand, intensifying price competition to keep utilization up. Supply-side overcapacity absorbed the rise in metal costs and pushed prices down.
Shift to LFP
The share of cobalt- and nickel-free LFP rose. LFP packs averaged USD 81/kWh, well below NMC's USD 128, so the changing mix pulls the overall average down. Adoption advances in uses that prioritize low cost over energy density.
Pull from stationary storage
Packs for stationary storage fell to USD 70/kWh, down 45% year-on-year — the steepest drop. Now a source of scale economics alongside transport, it supports cost declines by lifting overall cell demand.
The Cost Boundary Is Not Uniform Worldwide
Here is a practical trap: treating cost parity as a single global point leads to wrong decisions. In BNEF's data, pack prices were lowest in China at USD 84/kWh, while North America and Europe were 44% and 56% higher. This reflects differences in local production costs and dependence on imported batteries.
In other words, the BEV cost boundary shifts by region. In China, a wide range of vehicle classes already give BEVs a price advantage over ICE/HEV, while in the West the same classes carry higher battery costs and reach the boundary later. The bifurcation — BEV adoption running ahead in China and emerging markets, and relatively slower in the West — is corroborated by this regional battery-cost gap.
Why HEV/PHEVs Stay Thick in the Mid-Term
Even as battery prices fall, there are reasons HEVs (hybrids) and PHEVs (plug-in hybrids) remain resilient in the mid-term. Charging-infrastructure coverage, cold-weather range, and the regional cost boundary above all slow a wholesale move to BEV-only.
OEMs' HEV line additions and EV-plan deferrals are often cited as grounds for "EV is unnecessary," but they are more accurately positioned as investment-timing mismatches. Once falling battery prices push BEV TCO below ICE/HEV and fast-charging networks fill out, the HEV advantage will shrink. Conversely, until both conditions are met, multi-pathway approaches rationally coexist.
This view is falsifiable. If BEV pack prices fall further across major regions and fast-charging coverage clears a threshold, the HEV advantage will shrink sooner than expected. Conversely, if price declines stall and regional gaps fail to narrow, HEV/PHEVs will stay thick longer. What to watch is not the "global average battery price" but "pack prices and charging coverage in each key destination market."
The market-wide bifurcation is covered in Global EV Sales 2026: A Bifurcating Market.
Reference FactCards
> Source: BloombergNEF, Lithium-Ion Battery Pack Prices (December 2025). Average USD 108/kWh, BEV USD 99, LFP USD 81, NMC USD 128, stationary USD 70, and regional gaps (China USD 84 / North America +44% / Europe +56%) are based on the same survey.