The total cost of batteries for electric vehicles (EVs) has more than doubled since the start of the year, according to modeling from Rystad Energy (Rystad).
The numbers are based on its spot price analysis, which suggests total battery costs have jumped to $130 per kilowatt-hour (kwh), or about $9,000 per battery.
This follows lithium prices surging 118% since January, while cobalt, nickel and aluminum also saw historic rallies.
Commodities surged amid fears of supply disruption following Russia’s invasion of Ukraine, alongside a post-pandemic demand rebound as restrictions ease in developed economies.
Typically, automakers have long-term commodity deals, buying materials in multi-year deals, but with prices that are expected to stay high – it’s highly likely that those prices gross will impact future agreements.
Daniel Clarke, an analyst at Global Data, said AM City argued that lithium prices are here to stay in volatile market conditions.
He said: “This will have significant long-term implications for electric vehicle sales, costs and production. Automakers will have to choose whether to absorb the cost of rising battery metals or pass it on to the consumer.
The analyst argued that prices for electric vehicles could generally rise, as not all automakers will be able to pass on the costs.
He also suggested that the onus will be on manufacturers to have well-ordered battery metal supply chains.
Otherwise, production could be severely disrupted, either due to cost disadvantages or due to metal shortages.
Electric vehicles have entered the mainstream in recent months, with the vehicles now accounting for 18% of total car sales, according to the latest data from Close Brothers Motor Finance.