Are you ready to switch to an EV? Here’s why you may find yourself priced out of the market
Claudia Assis - 2h ago
It wasn’t supposed to be this way.
This year likely will be the first that electric-vehicle battery costs will go up, rather than continuing the steady decline that they’ve been on for more than a decade.
And EV buyers are seeing the result: several auto makers, from newcomers such as Rivian Automotive Inc. to established players such as Tesla Inc. have raised their EV prices. The move has affected all models, from mass-market electric sedans to coveted muscle cars with deep order books and even Ford Motor Co.’s EV version of the F-150 pickup truck, the vehicle that has reigned supreme as the best-selling vehicle in the U.S. for decades.
Supply-chain snags and shortages have kept auto prices higher and inventories depleted for the better part of two years. For EVs, however, there’s another layer of complexity, as makers are scrambling to secure lithium and other metals used in the production of EV batteries amid a renewed push to make them mainstream.
“Prices definitely are going up and the cost of the metals that go in batteries has increased dramatically,” said Michelle Krebs, an analyst with Cox Automotive.
The average price of an EV in August was $61,955, up 7.8% from $57,472 in August 2021, according to Edmunds.com. That compares with an average of $47,195 for all vehicles in August.
Edmunds gathers prices of vehicles sold through dealerships, so Tesla EVs are not included in those calculations as it sells its cars directly to consumers.
The Edmunds analysts estimated that the average EV price would hover around roughly $65,000 with the Teslas factored in. Rivian EVs are also not in the estimates due to their still-low volume.
“Price is the No. 1 obstacle to mass EV adoption,” while other barriers, such as range and charging anxieties, have become less of a concern for drivers, Krebs said.
Prices of lithium compounds and other metals used in batteries are up by triple-digit amounts, with Tesla planning to enter the lithium refining business.
China, the largest global EV market, “dominates the supply chain for the manufacture of lithium-ion batteries,” including the processing of minerals and raw materials, the Energy Department said in a recent note.
The U.S. “relies on international markets for processing of most lithium-battery raw materials,” it said in a report outlining policy steps to grow out of that dependency.
Lithium-iron phosphate battery-cell costs are up 84% relative to May 2021 and peaked in March at $153 kWh before coming down to about $143 kWh in July, said Yayoi Sekine, head of energy storage at BNEF.
Those prices are based on averages for raw-material spot prices, and actual prices may be lower since many battery makers and auto makers have supply agreements in place to smooth over the volatility, she said.
Battery costs are the lion’s share of EV costs, making up about 30% to 50% of a passenger EV as the share varies by vehicle model and range.
There’s little relief in sight for this year.
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