The long-awaited price parity in upfront purchase price for electric vehicles seems to have moved further away, as raw material input prices for batteries continue to rise. EV owners know that if you take a total cost of ownership approach, EVs are almost free cars. However, most purchasers would prefer that the initial cost of purchase be the same as an equivalent petrol or diesel car. That also avoids the sticky issue of “opportunity cost.” (Would you have invested any extra cash in something providing superb returns, or would you have spent it on extra travel, food, and drink?)
Battery producers have begun increasing lithium-ion cell prices as anode, cathode, and raw material prices have risen. Lithium carbonate has surged by 313%, cobalt hydroxide by nearly 82%, and nickel sulphate by 34%. Miners are rushing to bring more raw materials to market — certainly, the price increases will encourage more mining.
Since 2014, prices of NCM batteries have fallen from $300 per kWh to close to the magic number of $100 per kWh. This is widely seen as the price point which would enable battery electric vehicles to compete on ticket price alone. Although many would argue that the Tesla Model 3 and Model Y already compete superbly with other vehicles in their price class, the problem is that we also need electric vehicles competing at levels $10,000+ lower than that. Unfortunately, this long-term battery price trend may go into reverse for a while.
“Battery makers appear set to pass on lithium price increases to the automotive OEMs and other downstream customers which could have a major impact on electric vehicles coming to market between 2022 and 2024,” Mining.com writes.
With EV demand riding high, miners expect to be in a position to command high prices for lithium for at least the next 5 years. Some carmakers are following Tesla’s lead and taking the bold step of buying up mining assets. It may be late 2023 before the new projects that are underway start producing, though — or later.
Let’s hope the lure of high prices will bring more players into the market and we can reach that elusive price parity sooner than later and speed the uptake of EVs globally.