The power of electric vehicles is starting to slow the march of batteries to the mainstream, as they become cheaper, more reliable and easier to install.
Analysts and investors have been watching this development closely, and the trend has accelerated this year, as battery prices have fallen by an average of 6.5% to $8,700 per kilowatt-hour in August, according to data compiled by Bloomberg.
Battery makers have begun to look for ways to slow their decline.
Tesla and Nissan announced that they are cutting costs by 30% in 2018 and 2019, while Chinese electric car maker BYD said it will slash its profit forecast by 25%.
While the price of lithium-ion batteries has fallen by almost 80% over the last two years, the industry has been slow to catch up.
A battery can last for decades, and many are still under warranty for their lifetime.
But the rise of battery prices and the rapid rise in the size of batteries has made them a big market for automakers.
Lithium-ion battery makers say they have a strong position against rivals who are selling batteries that are 10,000 times cheaper and better.
The U.S. government has mandated that the cost of batteries in cars, trucks and buses be cut by 25% by 2020.
But electric car makers are hoping the industry can move to a low-emission electric vehicle fleet and lower the price for the batteries.
“There’s a real chance that there’s a lot of opportunities for battery makers to catch-up in a low cost market, because the cost is coming down,” said Jeffery Schier, chief executive officer of Advanced Battery Products, which sells batteries for cars and trucks.
Lithial-ion Battery Industry Still Falling Lithium battery makers have been growing at a slower pace in recent years, thanks to a surge in their cost and demand.
But they still face a long road ahead to catch the rapid decline of the battery industry, which employs roughly 100,000 people in the United States.
Companies like Tesla and Tesla Motors Inc. have already cut prices by a fifth or more in the last three years.
In the third quarter, the battery maker was down 7.3% in total revenue, according in a Bloomberg survey of U.K. battery makers.
Analyzing the battery makers’ earnings, Bloomberg said the industry was on track to lose $300 billion in 2020, which is the largest single-year loss for the battery business since the financial crisis.
The market is also expected to contract by 8% in 2019, Bloomberg found.
Lithia, which makes lithium batteries for the lithium-based battery industry and also sells battery cells, expects its market share to decline by 12% in 2020.
Lithias battery sales are also down 9.2% in the third-quarter, according a Reuters survey of analysts.
Tesla has said it plans to double the size and price of its lithium-sulfur batteries, while Nissan said it is planning to produce more of its batteries in Mexico.
Tesla’s and Nissan’s efforts to lower their costs have been successful.
Tesla said it was slashing its profit forecasts by 25%, but analysts say the company could still turn around its financials.
But Nissan’s and Tesla’s efforts could be costly.
Nissan said last month that it had lost $50 million in 2018 on a loss of $1.8 billion, and it has cut its revenue by more than $5 billion in the past two years.
The automaker has said that it will cut more than 20,000 jobs, and analysts say Nissan’s plans could cost it billions of dollars in losses.
The industry has struggled to keep up with rising demand for batteries, which are used in cars and buses.
Lithies batteries cost about $10 per kilogram and the industry is forecast to increase demand for battery packs by a third this year.
In 2020, the average cost of a lithium-acid battery will be $1,300 per kilo, according Bloomberg data.
The battery industry is expected to reach $1 trillion in revenue by 2020, up from $1 billion in 2018, according an industry analyst.
But as demand increases, so does the price, and companies are having trouble keeping up.
“Demand for lithium-hydrogen batteries is increasing rapidly and is expected increase in the coming years,” wrote Jefferies analyst Eric Lee in a report last month.
“The industry is facing a significant challenge to maintain its pricing competitiveness in the near term.
As a result, the potential for significant price declines in the future could be considerable,” Lee wrote.
“We believe that the battery market will remain vulnerable for some time.”