Battery prices are rising: Will EVs get pricier?
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Electric vehicles may get more expensive next year, thanks to the first annual increase in battery prices since 2012. At least one expert expects “prices next year will be $3/kWh higher than 2021 prices on a nominal basis…the first price increase that the battery industry has seen since Bloomberg began tracking these prices in 2012.”
Chip shortages have already pushed up car prices, but now Chinese battery makers like BYD, CATL, and Great Power Energy & Technology are mulling price increases of up to 20% — on top of earlier 20% raises at some companies — that are likely to have downstream effects.
- Higher raw material costs are to blame. Scarce materials like nickel, cobalt, and manganese have become more expensive, and other key ingredients in typically cheaper lithium iron phosphate batteries are up 280%.
But EV makers have no alternatives to source cheaper batteries.
- Overall, China supplies 85% of the world’s battery-grade cobalt, and is also the world’s biggest producer of nickel, which can be used instead of cobalt. In other words, the country has its bases covered.
- CATL alone controls 30% of the global EV battery market, controlling several steps of production, and BYD makes cars as well as batteries.
The takeaway: For electric vehicles to see widespread adoption, they need to be as affordable or cheaper than gas vehicles. That’s been happening for several years, but with prices rising, the trend may slow down. Global EV prices are likely to go up, and no one can do anything about it.
