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Rising battery metal costs could keep EVs expensive

01 June 2022 - 12:52 By Mark Burton
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.
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.
Image: Roman Zaiets / 123rf

A surge in battery metal prices means it could take several years 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 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 on Wednesday. But that’s 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 $100KWh (about R1,554).

“Reducing battery pack prices to $100KWh 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.”

Costlier lithium, cobalt and nickel could delay electric vehicles becoming as affordable as conventional cars, BloombergNEF says.
Costlier lithium, cobalt and nickel could delay electric vehicles becoming as affordable as conventional cars, BloombergNEF says.
Image: Bloomberg

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 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 driving high battery raw-material costs — war, inflation, trade friction — are also pushing the price of petrol and diesel to record highs.”

More stories like this are available on bloomberg.com


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