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EV battery costs skyrocket in 2022, hampering EV affordability

The cost of EV batteries has skyrocketed in 2022 due to rising prices of raw materials and battery components, according to a report. Bloomberg New Energy Finance (BNEF) report.

According to the report, the volume average for lithium-ion battery pack prices reached $151/kwh this year, up 7% from 2021. It marks the first time the average pack price has increased since BNEF started tracking prices in 2010—and slowed the price parity between electric and internal combustion vehicles.

That number represents an average across a variety of battery uses, including different types of electric vehicles, buses and stationary energy storage, BNEF noted, adding that the specific average available for EV packages is $138/kwh in 2022.

Nio 100-kwh battery pack

Nio 100-kwh battery pack

Average prices could even be higher in 2022 without increased adoption of lower-cost lithium iron phosphate (LFP) chemicals as an alternative to nickel-manganese cobalt (NMC) used by many manufacturers. . On average, LFP batteries are 20% cheaper than NMC batteries, in part because they don’t require cobalt, one of the raw materials whose prices will rise significantly by 2022, according to BNEF.

However, the total cost increase is higher than the increased application of LFP chemicals, according to BNEF. LFP is also not immune to cost increases. On a bundle basis, prices are up 27% in 2022, BNEF reports.

The increase in battery prices also comes despite the many recent battery production announcements, which will eventually increase supply but have not yet begun to affect the market. BNEF expects the market to maintain its current trajectory in 2023, predicting an average package price of $152/kwh.

GM Ultium battery - cell stacking

GM Ultium battery – cell stacking

BNEF expects battery costs to start falling again in 2024, when more lithium mining and refining capacity will come online, helping to keep prices down. It also predicts that batteries will hit $100/kwh — generally considered the point at which electric cars can reach the same price point as gas cars — by 2026.

That prediction shows that recent price spikes have hampered EV affordability. Just a year ago, BNEF predicted that electric vehicle battery cost will drop below the $100/kwh mark by 2024. Wood Mackenzie, earlier in 2021, has agreed—but it says $60/kwh is the real target to push electric cars past the cost of gas cars. That would help get rid of the idea that electric cars could still be cost more to buildbattery aside.

Ipsos, in 2020, finds that costs, more than charges, is the biggest barrier to apply EV. That is mainly before the increase of the past two years has affected the new and used electric car pricehowever.

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