The ongoing rise in prices of battery materials such as lithium, nickel, cobalt and copper, as well as components, coupled with supply and logistics constraints are headwinds for EV manufacturers and consumers.
One of the biggest barriers to the penetration of EVs is affordability, as the clean vehicles have a much higher total cost of ownership than conventional engines. Improvements seen so far could be put to the test in such a dire environment, which has been aggravated by the war in Ukraine, Kallanish understands.
“EV costs will rise by 10-15% minimum due to higher raw materials prices,” predicts Julian Kettle, vice-chairman of Metals and Mining at Wood Mackenzie. “Add to that rising electricity costs and inevitable taxation, and the economics of EV ownership will worsen.”
OEMs with electrification targets will likely try to maintain their production and sales guidance, but may also be forced to pass costs increases down the value chain to end-users. Tesla has reportedly increased its prices in the US and China, while Lucid Motors says a price revision will be inevitable.
Roland Zenn, senior manager of battery materials purchasing at Farasis Energy, calculates that the costs for battery cathode chemicals in a Tesla Model 3 (60 kilowatt-hour) has increased by 430% year-on-year. The NMC (90:5:5) battery would incur battery material costs of $1,395 per vehicle in March 2021. On 8 March 2022, this surged to $7,400.
The calculation is based on 38.8 kilograms of lithium hydroxide, 47.5 kg of nickel and 2.7 kg of cobalt content, with the most recent prices at $63/kg, $100/kg and $80/kg, respectively.
Zenn notes, however, that Tesla also has models with cheaper LFP cathodes; is probably hedging raw material prices and likely has contracts in place for price averaging or other bilateral price agreements. That means it might not actually experience such cost rises.
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Very good overview of the weekly steel market.