There were many indicators that warned of a forthcoming rise in the costs associated with electric car batteries. Now, said forecast has been fulfilled, standing at 151 dollars per kWh.
The already old aspiration of a market for electric cars accessible to all users seems to be moving a little further after knowing the latest data on the prices of lithium-ion batteries, the absolute dominators of the zero-emission automobile sector.
And it is that, after 12 years of monitoring prices with a continued decline as the protagonist, the trend has reversed and in 2022 they have risen 7% , according to data.
The causes of rising battery prices
The truth is that we have been warning for a while: raw materials have risen a lot in price , as well as battery components. Furthermore, inflation is affecting all sectors and the energy storage industry is no stranger to it.
This has caused an increase for the first time since 2010, when Bloomberg began tracking weighted average battery prices. Specifically, we are talking about lithium-ion battery packs intended for multiple uses, including electric vehicles and stationary storage.
Evelina Stoikou, energy storage associate at BNEF and lead author of the report, notes that “increases in raw material and component prices have been the main contributors to the higher cell prices seen in 2022. “
“In the midst of this rising prices for battery metals, large battery manufacturers and automakers have turned to more aggressive strategies to hedge against volatility, including direct investments in mining and refining projects,” it expands . .
LFP batteries dampen price rise
And all this despite the fact that, throughout 2022, much progress has been made in reducing costs thanks to the introduction of LFP cathodes instead of expensive nickel-cobalt-based cathodes (NCM and NCA).
On average, LFP cells have been 20% cheaper than lithium nickel manganese cobalt oxide cells by 2022. However, even low-cost chemistries like LFP, which is particularly exposed to lithium carbonate, have felt the price increase around the world. In fact, LFP battery pack prices are up 27% this year .
Europe and the United States suffer more from the rise in prices
While the weighted average price of battery packs has risen 7% in 2022 to $151/kWh, that rise has not played out equally across all industries or markets.
In fact, in the case of battery electric cars (BEV), the average price has been located at 138 dollars/kWh, of which 83% (115 dollars/kWh) corresponds only to the cells .
European and American manufacturers have noticed the rise in prices more.
Regionally, battery pack prices are lower in China than in the rest of the market. Specifically, 127 dollars/kWh in the Asian country. In contrast, in the United States there has been an increase of 24% and 33% respectively.
This can be explained by the relative immaturity of these markets , the higher production costs, the diverse range of applications, and battery imports. Lower volume and custom orders also drive up battery prices.
When will battery prices drop?
Bloomberg NEF forecasts indicate that the weighted average price of batteries is not expected to start declining until 2024, even though the prices of key commodities such as lithium, nickel and cobalt have moderated slightly in recent years. months.
According to said report, the average price of batteries in 2023 will be around 152 dollars/kWh, while in 2026 it should already be below 100 dollars/kWh . This, in practice, represents a delay of two years with respect to the initial forecasts prior to the pandemic and the energy crisis.
Yayoi Sekine, director of energy storage at BNEF, says, “Despite a reversal in falling prices, demand for batteries continues to hit new records every year. Demand will reach 603 GWh in 2022, which is almost double that of 2021. “
In addition, Sekine considers that “increasing supply at that growth rate is a real challenge for the industry , but investment in the sector is also increasing rapidly and technological innovation is not slowing down.”
For his part, Kwasi Ampofo, director of metals and mining at BloombergNEF, adds that “lithium prices remain high due to persistent supply chain constraints and the slow increase in new production capacity.”
However, Ampofo notes that “additional lithium supply could ease price pressure in 2024,” while geopolitics and trade tension remain “the biggest uncertainties for other key battery metal prices in the near term .” Resolving these tensions could help calm prices in 2023 and beyond.”