Price Spikes for EV Battery Materials

Electric Vehicle
Electric vehicle battery | Image by Herr Loeffler

The switch to electric vehicle (EV) batteries has been a marketing tool used by the automobile industry. The consistently falling price of lithium and other precious materials has allowed electric vehicles to become the industry standard leading into 2022; however, recent events have combated this push.

Russia’s invasion of Ukraine has caused concern in the automobile and battery industries. Rising prices and a shortage of raw materials threaten the future of the electric vehicle sector.

At the same time, investors have welcomed rising prices in the mineral resources market, as the average share price increased by 25% in March and April.

Battery makers are dependent on a plentiful supply of lithium, nickel, and cobalt. According to battery group Farasis Energy, the quantity of these metals necessary to make a 60KWh battery (found in a large electric sport utility vehicle) has risen in price from $1,395 a year ago to more than $7,400 in early March.

Part of the problem for the global electric vehicle and battery market is their use of materials sourced and exported from Russia.

Russia supplies 11% of the world’s nickel but is currently restricted from trading by economic sanctions. It is not known if the latest sanctions imposed by President Biden will remain in place even after the conflict in Ukraine is over.

Some automakers have made commitments to limit their dependency on the combustion engine. Audi has pledged to produce only electric vehicles from 2026, with VW and Ford joining forces to make the switch to EV battery power.

Previous to the conflict in Ukraine, falling battery prices over the last decade helped automakers move toward EV production and green initiatives. The cost of the first batteries in 2009 was over $1,000 for each kWh’s worth of electricity the battery could store. By the end of 2021, the cost per kWh storage had fallen to $130. Electric vehicle batteries can typically store anywhere from 25 to 100 kWh of electricity. The lowered price of lithium batteries had made electric vehicles commercially viable for the first time.

Now, automakers who have committed to ending gasoline use by specific dates face a challenge as the price of the raw materials used in the automobile industry climbs amidst Russia’s invasion of Ukraine.

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