Demand for electric cars is higher than ever, thanks to high gas prices and popular new models that seem to be released every day. But even though limited stocks and the dealer’s usual markup may seem like it’s the worst time to buy a new EV, you may want to think about taking a look sooner rather than later. A recently published report by research firm E Source predicts a significant increase in battery costs over the next few years, which will eventually be passed on to consumers.
Here’s what we know.
Lithium is the key
In an CNBC article, E Source’s findings point to an initial drop in the price of battery cells in the short term and then a 22% rise over the next few years as a result of rising raw material costs. According to E Source, battery prices – currently priced at around $ 128 per kWh – could drop to about $ 110 per kWh in 2023 and then rise to $ 138 per kWh by 2026 . It is then said that prices may fall steadily until 2031. up to $ 90 per kWh. E Source estimates that this could increase the cost of EV by $ 1,500-3,000 per car, which could affect overall EV sales.
Since these are all projections, this report is not a guarantee of how things will actually be, but the crux of the problem comes down to the main supply and demand. Manufacturers are constantly producing more attractive electric vehicles, rising gas prices are forcing more and more people to consider EVs, and there is political pressure on the widespread use of EVs. All of these forces stimulate demand, and a shortage of critical battery components, such as lithium, will eventually lead to battery congestion, leading to rising prices.
Although the problem is understandable, the solution for the industry as a whole does not seem so simple. E Source explains that since the price of lithium has risen by almost 900% over the past year and a half, the amount of investment in mining and production has not increased. The report notes that most lithium investments came from China for this market.
How much will this have an impact?
Although the main problems are clear, we do not know how much higher prices will affect EV buyers. After all, buyers are already paying thousands above stickers to get into a new car. Can a $ 3,000 price increase even drastic, especially if consumers are usually looking for longer loan terms to cut monthly payments?
The shortage of microchips may end in the next year or two, but there is a shortage of raw materials that will keep high EV prices for a while. Battery prices should start falling in 2026 – just in time for this new one Volkswagen Scout you stared.