The price of electric car batteries plummets and lowers costs

Buying an electric car is not exactly cheap.

Oliver Thansan
Oliver Thansan
23 March 2023 Thursday 04:59
14 Reads
The price of electric car batteries plummets and lowers costs

Buying an electric car is not exactly cheap. There have been increases of up to 16% in one year, according to data from the Organization of Consumers and Users (OCU), which compared the prices of some passenger cars between September 2021 and 2022. But an unexpected drop in the price of a material Battery essentials, along with other staples, could buck that trend, though experts disagree on how long that discount will last.

This is lithium, used in almost all electric car batteries. In November 2021, the price of this material skyrocketed and reached its maximum record last February, according to data from Benchmark Minerals. Since then, there has been a decrease, which could lead to a lower cost of batteries.

It is not the only raw material whose price has fallen. That of cobalt, another important material for batteries, has also more than halved. Copper, essential for electric motors and batteries, has fallen by around 18%, according to data collected by The New York Times.

This unexpected reduction has confused many specialists consulted by said medium. Some believe it will help drive EV manufacturers to lower prices, which could incentivize their purchase of forms, something necessary to fight climate change and ensure a more sustainable future.

According to The New York Times, some brands have already reduced fees. This is the case of Tesla, the company led by Elon Musk, which has lowered the cost of two of its most expensive cars, the Model S sedan and the Model X SUV. Other more affordable models are the Model 3 and Model Y In the case of Ford, it affects its Mustang Mach-E.

The average price of an electric vehicle in the US fell a thousand dollars - about 920 euros at current exchange rates - in February compared to January, according to the specialized company Kelley Blue Book. The question is whether this downward rate review, encouraged by the lower cost of essential materials for electric cars, will last over time or not.

Some analysts consulted by the aforementioned New York outlet explain that the fall in the price of lithium responds to short-term factors, such as the slowdown in sales growth in Europe and China after subsidies for the purchase of electric cars ended. However, other industry specialists believe the drop would suggest that new mines and processing plants were solving the lithium problem sooner than many analysts thought possible.

“We expect to see very high prices for the foreseeable future,” says American Battery Technology CEO Ryan Melsert, who attributes the recent decline in lithium prices to temporary factors such as a seasonal slowdown in electric vehicle sales in China.

This metal, essential for batteries due to its ability to store energy, costs between $5,000 and $8,000 per ton. And it sells for ten times that amount, according to Mobility Impact Partners.

It is such a coveted item because its extraction points are low. Most refineries are in China, and few managers and engineers outside China know how to build processing plants. Beijing's near monopoly over an essential resource has alarmed the Joe Biden Administration, which has promoted public aid to encourage the creation and development of mines and refineries in the country.

The truth is that it is a complicated challenge, they recognize from the US Administration. According to calculations by the State Department's undersecretary for economic growth, energy and the environment, José W. Fernández, the supply of lithium must be multiplied by 42 by 2050 to support a transition to clean energy. A fact that questions whether the reduction in prices and costs of electric cars can be sustained over time.