According to a new report, the cost to produce electric vehicles is poised to surge over the next four years due to scarcity of key raw materials needed to make EV battery cells.
Sam Jaffe, vice president of battery solutions for E Source, said that the battery industry is not ready for demand.
The price of EV battery cells has fallen in recent years. The average cost of a battery cell is $128 per kilowatt-hour, and by next year it could be $110 per kilowatt-hour, according to E Source.
E Source predicts battery cell prices will surge 22% from 2023 through 2026, peaking at $138 per kilowatt-hour, before they resume a steady decline through 2031.
The projected spike is the result of growing demand for key raw materials needed to make tens of millions of battery cells.
There is a shortage of lithium, and there is going to be an even sharper shortage. He said that you cannot make batteries if you don't mine the lithium.
Brine pools at the Albemarle Corp. Lithium mine in Calama, Antofagasta region, Chile, on Tuesday, July 20, 2021.E Source predicts that the price of an electric vehicle will go up between $1,500 and $3,000 per vehicle, if the surge in battery costs is any indication. The firm has reduced its EV sales projections.
According to the latest forecast from LMC automotive, EV sales will top 2 million in the U.S. by then. As more Americans embrace the idea of going electric, automakers are expected to introduce dozens of electric models.
The need to produce more of the materials that are essential for EV's has been warned by auto executives. Ford CEO Jim Farley called for more mining around the launch of the all electric F-150.
We need mining permits. The government and private sector need to work together to bring processing to the U.S.
As early as 2020, Musk urged the mining industry to increase its nickel production.
During a July 2020 conference call, Musk said that if you mine nickel efficiently and in an environment that is sensitive to the environment, he will give you a giant contract.
There is still a surprisingly low number of mining projects despite the fact that industry executives and government leaders agree more needs to be done to source raw materials.
With the price of lithium having risen nearly 900% in the last eighteen months, we had assumed the capital markets would unleash the floodgates to establish dozens of new mining projects. The firm said in its report that most of the investments have come from China for the Chinese supply chain.
CNBC's Meghan Reeder contributed to the article.
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