Electric automakers must brace for the increasing battery costs
The planet is gradually transitioning to electric cars, intending to achieve a net-zero emission globe where there are no climate changes that affect our daily lives. This move is critical and plays a significant role in conserving the environment. However, there are fears that the masses have regarding these digital cars, especially regarding the battery technology sector. One of the limiting facts in EVs include their batteries’ power. Therefore, investing in more reliable materials to make better batteries is the key to maintaining a robust transport industry.
Recently, there is a high demand for electric cars since governments have put up incentives and policies to encourage people to purchase EVs. However, this increase in demand for EVs will result in the electric car batteries materials of construction surge. These details are a conclusion of a well-researched study by analyst Goldman Sachs.
With pricey batteries’ primary materials, there can only be one result, an increase in electric car battery prices. Experts forecast that the batteries will rise by around 18% compared to the current cost, affecting the profit the carmakers are hoping to make. Why is that? Batteries are the most expensive sector in an electric car since it contributes between 20% and 40% of the vehicle cost.
The report was missing details on the commodities’ precise price targets. However, Goldman predicts that there will be historic peak prices that could double the lithium cost for electric batteries. This move is likely to return to the old days where batteries were expensive to buy and maintain. Besides, the cobalt cost is expected to double will that of nickel, rising by 60%.
In his report, he explained the three primary resources’ prices that have been rising since the start of this year, thanks to the increase in EVs’ demand. The research team also believes that to maintain a sustainable EV sector, countries will play a significant role in making policies to raise the national stockpiles.
Due to inadequate nickel in the industry, the industry could settle for another type of battery, Lithium iron phosphate. Currently, Tesla and Xpeng are carmakers using these kinds of batteries that miss nickel and cobalt, but stores lower energy. If nickel prices return to their previous price peaks of $50,000 for a tonne, cars’ cost will increase around $1250 and $1500, which will hurt the customers.
The electric vehicle industry’s growth and the high demand for battery materials depend on the electric cars’ market. Customers will broadly switch to electric vehicles from gas-powered vehicles when the battery cost is price-friendly and also adequate cat batteries. Goldman predicts that this shift could happen in the following decades since, by 2030, the battery costs will be less than the fuel-powered engines.