Here's Why EV Battery Prices Are Increasing

Electric Vehicles / Comments

This could result in problems making EVs more affordable for the masses.

Lithium-ion battery prices are no longer dropping and are now actually increasing at a potentially alarming rate. We recently reported about Ford and GM facing rising battery costs but this is clearly an industry-wide issue. According to data accumulated by Bloomberg, lithium-ion average prices are showing a 7% increase in 2022, the first time an increase has been recorded since the publication began its annual survey. What's causing the price jump?

Numerous factors, mainly the rising costs of essential battery materials like cobalt, nickel, and lithium. All three rare-earth minerals are in high demand for products aside from electric vehicles, including laptops, tablets, and smartphones.

It turns out the average battery price would have been even higher than current rates, but this was prevented thanks to the switch to the less expensive lithium-ion phosphate batteries (LFP). These lack cobalt and nickel. LFP batteries are now expected to account for nearly 40% of global EV sales this year.

2024 Hyundai Hyundai Ioniq 6 Forward View Hyundai 2024 Hyundai Hyundai Ioniq 6 View Out Back Hyundai 2024 Hyundai Hyundai Ioniq 6 Central Console Hyundai
2024 Hyundai Hyundai Ioniq 6 Forward View
2024 Hyundai Hyundai Ioniq 6 View Out Back
2024 Hyundai Hyundai Ioniq 6 Central Console

Another issue that's driving up costs is that battery manufacturers are currently seeing lower profit margins and are being forced to absorb the increasing costs of materials and other core components. The data gets even more specific.

The lowest recorded cost for EVs was in China at $131 per kWh, though it was for electric buses and commercial vehicles. The average battery pack prices for EV passenger vehicles, for comparison, were at $138 per kWh. China continues to have the cheapest pack prices on average at $127 per kWh. The US and Europe's average prices are 24% and 33% higher, respectively.

There is better news on the horizon. Analysts predict battery prices will drop again in 2024. Until then, upcoming EVs, such as next year's Hyundai Ioniq 6 and the Genesis GV60, aren't likely to cost more than planned but it does mean automakers will also have to absorb some costs.

2023 Genesis GV60 Frontal Aspect Genesis 2023 Genesis GV60 Charging Point Genesis 2023 Genesis GV60 Dashboard Genesis
2023 Genesis GV60 Frontal Aspect
2023 Genesis GV60 Charging Point
2023 Genesis GV60 Dashboard

Whether they'll be passed down to consumers remains unknown. What's already established is that in order to achieve price parity with combustion-powered vehicles, battery prices have to hit $100 per kWh. Data suggests that'll happen in 2026, a full two years earlier than once expected.

Meanwhile, the average new car price in the US for 2022 was over $48,000. It's never been higher but we can't blame EVs for this. The cost of producing combustion engine vehicles is also on the increase, again due to supply chain issues. As the global economy continues to recover from the pandemic, raw good material prices are expected to decrease. Until then, automakers will have to make do somehow.

2024 Chevrolet Blazer EV Front Angle View Chevrolet 2022-2023 Ford F-150 Lightning Front Angle View CarBuzz 2021-2023 Polestar 2 Driving Front Angle Polestar
2024 Chevrolet Blazer EV Front Angle View
2022-2023 Ford F-150 Lightning Front Angle View
2021-2023 Polestar 2 Driving Front Angle
Source Credits: Bloomberg

Join The Discussion

Gallery

2023 Genesis GV60 Front View Driving 2023 Genesis GV60 Dashboard 2021-2023 Polestar 2 Driving Front Angle 2023 Genesis GV60 Frontal Aspect 2023 Genesis GV60 Charging Point
10
Photos

Related Cars

Back
To Top