A surge in battery metal prices means it could take several years longer for electric vehicles to become as affordable as conventional cars, according to BloombergNEF.
Prices of lithium, cobalt and nickel have soared in the past year, eating into EV makers’ margins at a crucial point in the development of the burgeoning industry. With demand climbing, they now face a dilemma: swallow the incremental costs, or try passing them on to consumers.
Before the rally, battery prices were nearing levels that would make upfront costs of EVs competitive with traditional cars without state subsidies, BNEF said in a report Wednesday. But that’s now starting to change. Battery pack prices are set to rise this year for the first time in more than a decade, and broader inflation could severely delay a crucial tipping point where average battery prices fall below $100 a kilowatt-hour.
“Reducing battery pack prices to $100 a kilowatt-hour is now an achievable goal with the emerging generation of battery chemistries and cell designs,” BNEF analysts said in the report. “However, if raw-material prices remain elevated, or climb further, this point could be delayed by several years.”
One measure of lithium prices has spiked more than fivefold over the past year, while cobalt and nickel prices also have climbed.
There are some signs of relief for carmakers, however, with lithium, cobalt and nickel prices retreating or steadying in recent weeks. And while long-term prospects remain strong, Goldman Sachs Group Inc. expects the price of those three crucial metals to ease in the next two years as producers race to bring on new supply.
At the same time, sticker prices for conventional cars are rising, as well, and high fuel prices are making EVs more attractive.
“The rising cost of batteries does not derail near-term EV adoption,” BNEF analysts said. “Some of the factors that are driving high battery raw-material costs — war, inflation, trade friction — are also pushing the price of gasoline and diesel to record highs.”
(By Mark Burton, with assistance from Craig Trudell)
Comments
Hamid Akbari
Hello
Since the EV battery market is new, it would need some inventory to get prices stabilized. There have been many new mines and production lines coming online during past decade and there are more to come. The recycling industry has also been getting attentions from the investors with many new startup companies coming to existence. The future of EVs are bright, however, we are in the transitioning phase where we need to catch up on providing the raw materials required. It is obvious that the speed of mining and production projects are much slower than the manufacturing industry which is because of the nature of mining business and the long processing time of permits needed.
Thanks.