[ad_1]
- Battery prices rose this year for the first time in a decade, according to BloombergNEF.
- That’s a real problem for car companies and the growing electric vehicle industry.
- Automakers are racing to reduce those costs — but it won’t happen overnight.
Electric car battery prices are rising for the first time in a decade, and that’s a problem for automakers betting their futures on a shift away from internal combustion engines.
That increase — the effect of rising costs for battery components like lithium, cobalt, and nickel, according to a new report from Bloomberg NEF — likely won’t affect auto prices anytime soon. soon, experts say. And it’s likely a temporary bump: BNEF predicts prices will drop in 2024, as more lithium production comes online.
Still, it’s bad news for automakers like GM and Ford, which are in the midst of a historic transition, as well as EV-making startups, all of which want electric vehicles to make of earnings sooner rather than later.
“The big spikes we’ve seen in the prices of materials,” said Andreas Breiter, automotive partner at consultancy McKinsey, “make it harder to make an electric vehicle that’s profitable.”
So, car makers are racing to counter the price hikes. The average new EV purchase was about $64,249 in October, according to Kelley Blue Book, and automakers know they need cheaper EVs to make up for it.
Some potential solutions
First, auto manufacturers are scrambling to establish battery supply in the US, as most American players have long relied on foreign supply chains. Much of the work to bring battery supply chains here has been driven by provisions in this summer’s climate legislation, which link significant tax credits to the use of EV materials and manufacturing at home.
GM signed a contract with Australia’s Controlled Thermal Resources to leverage its mining efforts in California. Ford’s purchase of lithium from the ioner mining project in Nevada.
Automakers are also exploring different types of batteries to reduce their reliance on traditional lithium-ion batteries and their highly in-demand components.
“While we’ve seen headwinds, we also have an opportunity to continue lowering our costs from both an engineering and design perspective,” Rivian CFO Claire McDonough said of battery costs at a Deutsche Bank industry conference. in June,
Meanwhile, automakers are also establishing recycling plans, because returning the materials they need back into their supply chains can reduce what they have to spend on new ones.
However, there are roadblocks
All of those fixes have their own problems.
Establishing an EV battery supply chain cannot be done overnight. It takes years just to get a lithium mine up and running. Plus, many players — auto giants, startup players, and all the other makers of battery-powered products — are competing for the same supplies.
And, any new EV battery mix has trade-offs. Using some materials instead of others, for example, may mean compromising on energy density, faster charging capabilities, or performance measures. Automakers don’t want to do that amid a push to convince consumers that EVs are just as fun and useful as gas-powered cars, if not more so.
Given the many challenges in the EV battery space, prospective car buyers shouldn’t expect the automaker’s ideas to quickly materialize in the form of lower EV prices.
“There are still potential supply chain questions across the industry,” said Matt Sculnick, executive director of the firm Nomura Greentech’s advanced transportation group, “with a big part of it around batteries.”
[ad_2]
Source link
