Surging prices for the metals that make up electric-vehicle batteries have ended a decadelong decline that brought the cost of EVs to within spitting distance of gasoline-powered vehicles.
Since 2010, lithium-ion battery prices on average have tumbled 90% to about $130 per kilowatt-hour. The magic number that makes electric vehicles competitive with internal-combustion engine vehicles is roughly $100 a kilowatt-hour. Many expected the battery industry to reach that mark in 2024, a goal that is looking increasingly elusive.
Lower costs helped boost EV sales by 112% in 2021 to more than 6.3 million units world-wide from the previous year, according to Benchmark Mineral Intelligence, which tracks the global battery supply chain.
Now, prices are soaring for the key ingredients in batteries. Battery-grade cobalt prices are up 119% from Jan. 1, 2020, through mid-January 2022, nickel sulfate gained 55% and lithium carbonate rose 569%, according to Benchmark.
“What’s happening in the supply chain is casting doubt on that $100 kilowatt-hour price,” said Caspar Rawles, Benchmark’s chief data officer. “We’re hearing [about] quite significant price increases for auto makers from cell suppliers.” Some battery-cell makers that historically offered long-term fixed-price contracts have switched to variable-price deals, letting them pass on some of the costs of rising metals prices to customers, he said.
Most major U.S. and European auto makers shifted their focus to electric vehicles in the past few years, prompting a burst in demand that quickly outpaced supplies. China, which dominates the battery supply chain and has the world’s largest EV market, has also significantly increased EV production. Since it typically takes seven to 10 years to open a new mine, many battery materials could remain in short supply for years.
“You’ve got soaring demand for all these battery metals, and there’s this complete disconnect” between the mining sector and the automotive industry, said Daniel Clarke, thematic analyst at GlobalData, a data analytics group in London.
The lithium market is expected to see its biggest shortage on record in tons in 2022 amid soaring demand, labor problems and Covid-19 disruptions, according to Benchmark. EV auto makers in China have already started boosting prices, with
raising the sticker price on some models by more than $1,000, Benchmark said.
last year said one of his biggest raw-material concerns was nickel. “So hopefully this message goes out to all mining companies,” he said on an earnings call. “Please get nickel.” Tesla has a contract to get nickel from
BHP Group Ltd.
, the world’s largest miner by market value.
New projects also often face protests from nearby communities, raising questions about expanded supplies. In January, Serbia revoked