Why the price of lithium is accelerating the cost of EV batteries.

The primary element of EV batteries – lithium, is seeing a huge hike in prices for the first time in a decade. In the last 12 months, the cost of lithium has multiplied by almost 450% with the price of a megatonne of lithium carbonate increasing from $32k to $71k.

Electric vehicle ownership is already out of reach for so many and this price spike looks set to make the electric car future even more unobtainable.

Until now we had seen a trend of falling prices that car manufacturers had hoped would allow the cost of an EV to rival that of a fossil fuel motor. However, the knock-on effect of the pandemic has badly impacted both supply chains and the opening of lithium mines and refineries, which in turn has hugely affected the amount of lithium available. 

Simultaneously, consumer demand for EV’s has grown and the impending ban on new fossil fuel cars in 2030 has meant that manufacturers have increased their electric vehicle production.

The companies who produce the batteries have had to pass on the lithium costs to the car manufacturers, who are then forced to pass this on to consumers. 

Tesla have already increased prices numerous times this year, most recently in June, as the cost of its Model 3 increased by £2,500 from £45,990 to £48,490.

It’s generally agreed by analysts that lithium prices will begin a downward trend as lithium supply is increased, but it’s thought this will take at least three years.

Our advice – if you’re in the market for an EV, it could be worth securing one sooner rather than later.