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