Battery Raw Materials Prices More Than Doubled Since The Pandemic

Cobalt, nickel, and lithium, which are all essential for the manufacturing of batteries of EVs, are leading the cost increase in the average raw material costs for EVs. Between March 2020 and May 2022, prices increased by 144% to $8,255 from $3,381 per vehicle according to a report from AlixPartners.

  • EV-specific costs have climbed from from $2,000 to $4,500 over the last two years
  • As of May 2022, the $8,255 average raw materials costs per EV compares to $3,662 for ICEs

Manufacturers Hike EV Prices And Could Delay New EVs Releases

Higher costs are likely to cause a relative slowdown in EV launches as manufacturers shift away from rushing new EV releases and increasingly focus on profitability.

As a result, automakers are now increasing prices for consumers.

EV Sales Could Reach 33% of Global Sales by 2028

According AlixPartners, electric vehicles sales could reach 33% of global sales by 2028 and 54% by 2035 as demand increases in most key markets.

  • In 2021, EVs accounted for just under 8% of total sales
  • AlixPartners reported that automakers and suppliers now anticipate spending at least $526 billion on EVs and batteries between 2022 and 2026 to meet demand
  • That is more than twice the $234 billion expected for EV investments for the 5-year period from 2020 to 2024

Benchmark's Take

  • In the long run, EVs will continue to benefit from consistent policy support with incentives and subsidies from governements
  • Strained battery supply chains, strong demand and rising raw materials costs could derail the electric car boom as new car releases are pushed back and prices increase
  • However, the relative competitiveness of EVs is unaffected by the current oil price scenario, despite the sharp increase in raw material costs


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