BYD, NIO, Xpeng and other Chinese EV firms face slower growth, as higher metal prices push up battery costs
- The prices of lithium carbonate, cobalt and nickel, key metals used in EV batteries, have soared this year
- The rise in lithium carbonate alone would add an average US$470 to the cost of producing an EV battery, Suzhou Hazardtex executive says
EVs are already more expensive than conventional cars because of high battery costs, and an increase in metal prices will force battery makers to raise prices and pass these on to carmakers and buyers, analysts said.
“The trend of falling battery prices has reversed this year and it will probably continue over the next few year. Higher battery prices will be a big stumbling block to the wide use of EVs,” said a senior executive who did not want to be named at Suzhou Hazardtex, an energy solutions provider that supplies specialised vehicle batteries.
Cheap batteries are key to growth and wider use of EVs. As battery costs came down from about US$1,200 per kilowatt-hour (kWh) to US$137 per kWh in 2020, a carmaker could save more than US$43,000 in costs on an EV with a 50 kWh battery, according BloombergNEF data.
A drop to US$100 per kWh – IHS Markit forecast earlier this year that prices would fall to this level in 2023 and drop further to US$73 per kWh by 2030 – could make even unsubsidised EVs more competitive against their petrol-guzzling peers.
However, the prices of lithium carbonate, cobalt and nickel – key metals used in EV batteries – have soared this year. The price of lithium carbonate has more than tripled this year to 210,500 yuan (US$3,304) per ton in China, while Cobalt has also more than doubled to more than US$68,000 a ton.