It looks like cheap EVs won’t be coming anytime soon. Both EV production and sales are ramping up, and the industry expects both demands to climb even higher through the end of the decade. The downside of this demand is resource scarcity, which will affect EV battery prices. As CNBC reports, the next four to five years will see EV and battery cell prices spike.
The main driver of these increases is the growing scarcity of lithium, a major component in battery cell production. An analysis by Fastmarkets from last year says lithium supplies are expected to collapse relative to demand by 2026 and decline through 2030. And as VP of Colorado research firm E Source Sam Jaffe pointed out to CNBC, “You cannot make the batteries if you don’t mine the lithium.”
Automakers have been aware of this looming shortage and have called for more mining. Many are starting to partner with the mines themselves: GM has made an investment in an Australian mining company’s efforts to extract lithium from California’s Salton Sea; BMW purchased over half a billion Euros of lithium in Australia. Ford CEO Jim Farley has also called for more lithium mining.
So, through 2026, E Source estimates that battery cell prices will go up to $138 per kilowatt-hour, which will make EVs more expensive. Depending on the vehicle, E Source predicts EV prices will increase $1,500 to $3,000. But it’s not all bad news, as a price decline is expected after 2026.
So while automakers have (sort of) been promising that cheaper EVs are coming, other forces are very much working against them. More and more EV models are coming, but the realities of raw material prices increasing EV prices may keep EV adoption out of reach for millions of people, without more help from the government, at least.