Battery Metals Price Surge Regresses Efforts for Cheaper EVs

Soaring battery metal prices means it could take years longer for electric vehicles (EVs) to become cost competitive with combustion engine cars. Lithium, cobalt and nickel prices have all skyrocketed in the past year, affecting EV margins at an important point in the development of the industry. With the demand for EVs increasing, producers try to come to a decision: swallow the costs or pass them to consumers.

Before the battery metal price rally, battery prices were nearing levels that would make upfront costs of EVs competitive with combustion engine cars without state subsidies. With the battery metal price surge, battery pack prices are set to rise this year for the first time in more than a decade. Inflation could further delay a tipping point where average battery prices fall below $100 per KWh.

Reducing battery pack prices below $100/KWh is an achievable target with technological advancement. If raw material prices keep rising however, that target could be pushed back by several years.

Lithium prices have surged more than five-fold over the past year, while cobalt and nickel prices also have climbed.

There are also good news for EV makers as prices of those three metals have been retreating or going steady in recent weeks. Thanks to producers’ race to bring in new supply, prices could ease in the next two years.

Moreover, as sticker prices for combustion engine cars and fuel prices are rising, EVs are still attractive for consumers.

Some of the factors that drive battery metal prices up, including war, inflation and trade friction, have also been affecting gas and diesel prices. So battery costs may not derail short term EV adoption.

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