The value of lithium-ion batteries rose for the primary time in additional than a decade this yr, with surging uncooked materials prices anticipated to problem the automobile trade’s efforts to show electrical automobiles right into a mass market product.
Hovering costs of battery metals corresponding to lithium, cobalt and nickel and better element prices pushed battery pack costs as much as $151 per kilowatt hour, a 7 per cent rise in contrast with a yr in the past and the primary improve since BloombergNEF started its annual survey in 2010.
The corporate expects costs to rise additional to $152 per kWh subsequent yr. In 2010, costs have been $1,160 per kWh on common.
The automobile trade has lengthy considered the $100 per kWh battery pack as the purpose at which electrical automobiles will turn out to be aggressive with combustion engine automobiles.
Nonetheless, lithium costs have elevated 10-fold for the reason that begin of 2021 and nickel is up 75 per cent, whereas cobalt costs have been greater than double their 2020 common this yr.
In consequence, BloombergNEF forecasts that the $100 per kWh stage shall be reached by 2026, two years later than beforehand anticipated. This can “negatively influence the power for automakers to provide and promote mass-market EVs in areas with out subsidies”, it mentioned.
It added that the upper prices may be problematic for the economics of battery vitality storage tasks which might be important to stabilising the grid as intermittent renewable energy grows.
The rise in battery pack costs would have been even larger if automobile firms and cell producers within the Chinese language market had not switched to cheaper lithium iron phosphate, LFP, batteries, which don’t use cobalt and nickel however have a shorter vary.
In 2022, there have been 603 gigawatt hours of demand for lithium ion batteries, nearly double the extent of the earlier yr. Provide chains are struggling to maintain up.
Lithium-ion battery pack costs range considerably in numerous areas. In China they value $127 per kWh on common, whereas within the US and Europe costs are 24 and 33 per cent larger respectively. The distinction is defined by larger manufacturing prices in much less developed western markets, in addition to their choice for longer vary batteries that use nickel and cobalt.
Evelina Stoikou, an vitality storage affiliate at BloombergNEF, mentioned that the rising uncooked materials and elements prices has pushed carmakers to take action to safe assets and produce prices down.
“Amidst these value will increase for battery metals, giant battery producers and automakers have turned to extra aggressive methods to hedge towards volatility, together with direct investments in mining and refining tasks,” she mentioned.
There may be important uncertainty about when battery metallic costs will ease. The world’s largest lithium producers have warned concerning the difficulties of accelerating manufacturing to deal with rocketing demand whereas the US, Europe and different international locations are making efforts to scale back their dependence on China.
