Attendees look at the all-electric Ford F-150 Lightning pickup truck at the Washington Auto Show in Washington on Tuesday, January 25, 2022.
Bill Clark | CQ-Roll Call, Inc. | beautiful pictures
According to a new report, the cost to produce electric vehicles is expected to increase over the next four years, due to the scarcity of key raw materials needed to produce EV battery cells.
“The demand tsunami is coming,” said Sam Jaffe, vice president of battery solutions at E Source, a research firm in Boulder, Colorado. “I don’t think the battery industry is ready for it.”
The price of EV battery cells has fallen in recent years due to increased production around the world. Battery cells currently cost an average of $128 per kilowatt-hour, and by next year could cost around $110 per kilowatt-hour, E Source estimates.
But the drop won’t last long after that: E Source estimates battery prices will increase 22% between 2023 and 2026, peaking at $138 per kilowatt-hour, before they continue to decline steadily for by 2031—maybe as low as $90 per Kilowatt hour.
The expected spike is the result of growing demand for key raw materials, such as lithium, needed to produce tens of millions of battery cells, Jaffe said.
“There is a literal shortage of lithium, and will be even more scarce,” he said. You can’t make batteries if you don’t mine lithium.”
Brine tank at Albemarle Corp’s Lithium mine in Calama, Antofagasta region, Chile, on Tuesday, July 20, 2021.
Cristobal Olivares | Bloomberg | beautiful pictures
An increase in battery costs is expected, which could drive the price of electric vehicles sold by 2026 to anywhere between $1,500-$3,000 per unit, E Source predicts. The company has also reduced its electric vehicle sales forecast for 2026 by 5% to 10%.
According to the latest forecast from consulting firm LMC Automotive, electric vehicle sales are expected to reach 2 million vehicles per year in the US. Automakers are expected to introduce dozens of electric vehicle models as more Americans embrace the idea of going electric.
Automotive executives are increasingly warning of the need to produce more of the materials needed for electric vehicles. Ford CEO Jim Farley called for more mining last month around the company’s launch of the all-electric F-150 Lightning.
“We need a mining license,” Farley told CNBC.
Tesla CEO Elon Musk, as early as 2020, has been urging the mining industry to increase nickel mining.
“Tesla will give you a huge contract for a long time if you mine nickel efficiently and in an environmentally sensitive way,” Musk said on a July 2020 conference call.
While industry executives and government leaders agree that more needs to be done to source raw materials, E sources say there is still a surprisingly low number of mining projects remaining. .
“With the price of lithium having increased by nearly 900% over the past eighteen months, we expected the capital markets to flood to set up dozens of new lithium mining projects. Instead, investments have taken place. output is very small, with most of it originating in China for the Chinese supply chain,” the company said in its report.
— Meghan Reeder of CNBC contributed to this article.
