A further cut in electric car prices is uncertain, analysts say as prices for materials used in batteries skyrocket. This is due to the sharply increasing demand for lithium and cobalt, for example.
According to figures from Benchmark Mineral Intelligence, the price of cobalt was 119 percent higher in mid-January than at the beginning of 2020. The price of nickel rose by 55 percent and lithium is up 569 percent. The numbers are in an article from The Wall Street Journal.
The price of lithium-ion batteries has fallen by about 90 percent since 2010, to about $130 per kilowatt hour, according to the newspaper. Expectations were that that decline would continue to about $100 per kilowatt-hour by 2024 and that electric cars would then be able to compete on price with models with a combustion engine.
The analyst firm tells the newspaper that there is doubt from the supply chain about the feasibility of the price of 100 dollars per kilowatt hour. Battery manufacturers that in the past offered long-term fixed-price contracts are said to have switched to variable-price contracts.
Demand for the metals needed for batteries is on the rise as more car manufacturers are planning electric vehicles and phasing out combustion engine models.
Several manufacturers are working on alternative batteries to save on costs. For example, Tesla wants to use lithium iron phosphate batteries worldwide in Standard Range models. These LFP batteries use iron in the cathode instead of scarce and expensive materials such as nickel and cobalt. However, LFP batteries generally have a lower capacity than lithium-ion variants.