Experts anticipate a decline in electric vehicle (EV) prices relative to conventional vehicles as the cost of one of the key components in EVs decreases, raising hopes that automakers will be able to close the gap as they struggle with reduced demand.

 According to Goldman Sachs analysts, batteries account for about one-third to one-quarter of the cost of producing an EV.

 The global average cost for automakers is expected to be around $115 per kilowatt-hour in 2024, approximately 23% lower than last year, with prices expected to drop another 20% in 2025.

 Tesla CEO Elon Musk recently noted that the costs of lithium-ion cells used in EV batteries have fallen, a significant reversal from the “massive increase” seen during the pandemic when automakers placed “very large orders.

” Musk said during the company’s shareholder meeting in June that “battery cell suppliers have increased their supplies, and orders from other automakers have decreased.” The primary metal used in current EV batteries has dropped by more than 70% over the past year.

 This year, automakers in the United States have scaled back plans to launch EVs amid declining demand. Automakers have tried to make EVs more affordable to consumers through financing deals and cash incentives.