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Electric vehicle battery prices increase for the first time this year

Electric car batteries have become more expensive this year due to rising material costs and inflation, after decades of steadily falling prices.

This is according to leading research firm BloombergNEF (BNEF) in its annual battery price survey, which shows that the price of lithium-ion battery packs has increased 7.0% since 2021.

BNEF says this is the first increase in battery prices since it began tracking the market in 2010, BNEF says average prices by volume for li-ion packs across all sectors have increased US$151 per kWh of capacity ($A226).

The reason for the price increase is rising raw material and battery component prices, coupled with persistent economic inflation – which outweighs the savings gained from the growing economies of scale.

“The upward cost pressure on batteries outweighs the greater adoption of lower-cost chemistries such as lithium iron phosphate (LFP). BloombergNEF expects prices to hold at a similar level next year, continuing to defy historical trends,” the research firm added.

Since batteries are the most expensive component in EVs, increasing the cost of packages will be an obstacle to making electric cars more affordable.

It should be noted that the figures above represent averages across multiple battery uses, including different types of electric vehicles, buses, and permanent storage projects.

In particular, for battery electric vehicle (BEV) packages, the price is $138/kWh ($A207) on a volume-weighted average basis in 2022. At the cellular level, the average BEV price is 115 USD/kWh ($A172), which means that on average cells account for 83 percent of the total package price.

Over the past three years, the “cell-to-package cost ratio has differed from the traditional 70:30 division ratio,” BNEF says. It found this was in part due to changes to packaging design, such as the introduction of an umbrella-to-package approach, which reduced costs.

The cheapest battery pack price in China is $127/kWh ($190) – partly explained by sheer size, given that China is the world’s largest electric vehicle market.

Plans in the US and Europe are 24% and 33% more expensive, respectively.

The BNEF suggested that prices could have increased further by 2022 “without the greater adoption of a low-cost cathode chemical known as LFP and the continued reduction of expensive cobalt in nickel-based cathode”.

On average, LFP cells such as those used in Tesla Model 3 and Y, MG ZS EV and BYD Atto 320% cheaper than lithium nickel manganese cobalt oxide (NMC) batteries by 2022 – even though the actual price of LFP packs has increased 27% on the year.

Evelina Stoikou, BNEF energy storage associate and lead author of the report, said: “Increasing prices of raw materials and components was the single biggest driver of the higher cell prices observed. in 2022.

“Amid such rising battery metal prices, major battery makers and automakers have turned to more aggressive strategies to hedge volatility, including investing directly in futures projects. mining and refining projects.”

While the prices of major battery metals such as lithium, nickel and cobalt have fallen slightly in recent months, BNEF expects average battery pack prices to continue to rise in 2023 at $152/kWh ($A228) in real dollars in 2022.

However, BNEF also said it expects battery prices to start falling again in 2024, when lithium prices are expected to fall “as more mining and refining capacity becomes available”.

BNEF’s 2022 Battery Price Survey predicts that average battery prices will fall below the magical $100/kWh ($A150) threshold by 2026 – albeit two years later than expected.

“Demand will hit 603GWh in 2022, almost double 2021. Scaling supply at that growth rate is a real challenge for the industry, but investment in the sector is also growing. fast and technological innovation is not slowing down,” added Yayoi Sekine, head of energy storage at BNEF.

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