Electric vehicle pricing uncertain due to rising battery prices

by AatoMobil

Electric vehicle pricing

The prices for elements that turn out to be batteries for electric-powered vehicles are on the rise. Since 2010, the average prices of lithium-ion batteries have increased by 90%. The cost turns out to be $130 per kilowatt-hour. The increase in electric vehicle pricing has increased the gap between EVs and their IC engine counterparts.

The year ahead is going to witness a multitude of electric vehicles hitting the market. The lower pricing of lithium-ion-based batteries had proved beneficial to the EV segment. The initial prices to develop lithium-ion batteries were comparatively lower. 2021 saw EV sales grow by 112%, resulting in 6.3 million units being sold worldwide.

Increase in cost of battery components

The increase in prices in battery components such as cobalt, nickel sulfate, and lithium carbonate are primary suspects hovering over electric vehicle pricing. This will prove to be a cause of concern for auto manufacturers, as they would have to increase their spending capacity towards cell suppliers.

The rising demand for battery supplies has proven to be the chief contributor to the increase in the prices of battery ingredients. Markets like China have increased their EV production and have created a short supply of battery materials. There definitely seems to be a gap between the supply and demand chain.

Amidst the increasing demand, lithium reserves are on the depletion, and supplies will face a shortage in 2022. Manufacturers in China have already increased the prices of electric vehicles by almost a thousand dollars. Tesla boss Elon Musk said that his primary concern was the shortage of nickel. Tesla currently gets nickel from BHP Group which is a leader in the mining industry.

Solutions to electric vehicle pricing

The obvious solution to these problems is the optimization of mining operations. Battery recycling is another business that is proving to be another source of supply. Newer battery technologies can reduce the reliance on materials such as Cobalt and Nickel.

A battery technology implemented by Tesla that used lithium iron phosphate accounted for 57% of total battery production for vehicles in China in 2021. These batteries are said to be using a cheaper, and more plentiful iron in their cathodes. There is no requirement for nickel or cobalt to develop these batteries. However, these batteries tend to offer a shorter range than their lithium iron counterparts.

Related Posts

Leave a Comment