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Study: Lithium-ion batteries will cost 30% less in 2017

The market for lithium-ion batteries will reportedly grow to a whopping $14.6 billion in 2017.

In spite of the government bonuses offered towards the purchase of a new clean car, electric vehicles and plug-in hybrids are often more expensive than comparable gasoline-powered models.

The increase in price is attributed to the technology found in these vehicles. Many EVs and plug-in hybrids use a lithium-ion battery pack that is made from fairly expensive chemicals.

A study conducted by a research firm called Pikes Research predicts that the price difference between EVs and gasoline-powered cars will gradually lessen as lithium-ion battery prices are expected to drop by over 30% by the end of 2017.

The drop can be attributed to several reasons. One of them is that battery manufacturing processes will become more streamlined and therefore more cost-effective. Another reason is that access to lithium is expected to become more widespread, so the raw material's price will drop.

Pikes Research claims that an increase in the demand of electric vehicles and plug-in hybrids will be the main catalysts for this trend.

"The market for Li-ion batteries will be driven primarily by plug-in hybrid electric vehicles (PHEVs) and battery electric vehicles (BEVs), which require much larger battery packs than hybrids," said research director John Gartner.

Pikes Research thinks that the projected decrease in the cost of batteries means that EVs will have an easier time competing with vehicles powered by an internal-combustion engine

"Reducing the installed price of EV batteries to $523 per kilowatt hour in 2017 will be a critical step towards making PEVs cost-competitive with petroleum-powered vehicles," said Gartner.

If electric vehicles and plug-in hybrids manage to gain as much ground as Pikes Research predicts, the market for lithium-ion batteries will reportedly increase from $2 billion in 2011 to a whopping $14.6 billion in 2017. About half of the demand is expected to come from Asia, while Europe and the United States will represent about 21% and 25% respectively.