Electric car prices could go up before they come down

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The secret of affordable electric vehicles is cheap batteries. But after years of falling prices, battery costs are now heading in the wrong direction.

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why it matters: Expensive batteries could drive up the price of electric vehicles – threatening the auto industry’s shift away from fossil fuels, and in turn, society’s fight against climate change.

Running news: Rising costs of minerals and other raw materials could push the average price of lithium-ion battery packs up to $135 per kilowatt-hour in 2022, according to researchers at BloombergNEF who study the energy transition.

  • The projected 2.3% increase would mark the first price increase in a decade.
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What are they saying: “This creates a difficult environment for automakers, especially in Europe, who have to increase EV sales to meet average fleet emissions standards,” says James Frith, BNEF’s head of energy storage research. bloomberg,

  • “These automakers may now have to make a choice between reducing their margins or passing the cost, at the risk of preventing consumers from buying EVs.”

What are you saying: Electric vehicle dealers are about to flood the showroom.

  • Last year, there were only 24 EV models for sale in the US
  • According to IHS Markit forecast, by 2025, consumers will have 146 EV models to choose from.
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yes but: High sticker prices, along with concerns about the availability of charging stations, are still barriers to public acceptance.

  • Automakers have responded by introducing cars with longer driving ranges – which require bigger batteries.

Where does it stand: Battery pack prices have been falling steadily since at least 2010, when the average cost was $1,200 per kilowatt-hour.

  • The latest data shows that battery prices have dropped 6% over the past year to $132 per kilowatt-hour.
  • The industry is targeting $100 per kilowatt-hour, which would put the purchase price of EVs on par with their gasoline counterparts.

what to watch: BloombergNEF says the $100 target by 2024 is still possible, but could take a few years due to higher commodity prices.

Editor’s note: This story was originally published on December 1.

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