Electric car batteries are getting cheaper “rapidly”, according to a new index of prices which suggests they dropped by a third within three years.

The average price of vehicle-grade lithium-ion batteries fell from at least £627/kWh ($1000/kWh) in 2009 to £432/kWh earlier this year.

Bloomberg New Energy Finance puts the lower price down to “excess manufacturing capacity and weak demand”.

Michael Liebreich, chief executive of Bloomberg New Energy Finance said: “Batteries are one of the biggest drivers of the cost of electric vehicles and hence of their uptake. A sharp decline in price may be unwelcome for battery manufacturers, but it is essential for the long-term health of the sector. Battery prices will be one of the key pieces of data for investors, policy-makers and the car industry to watch over the next few years and that is why we have launched this index.”

Analysts behind the quarterly Electric Vehicle Battery Price Index expect the cost of lithium-ion batteries to drop below £100/kWh in 2030.