The demand for electric vehicles (EVs) remained robust despite the escalating costs of batteries.
Accordingly, lithium battery cells rocketed to $160.00 per kilowatt-hour in the first quarter, above the $105.00 last year. This upward movement mirrors the fastest pace in years.
In addition, it further fueled fears about long-term battery metals shortages. The price increase is due to supply chain disruptions, sanctions on Russian materials and investor speculation.
Nevertheless, buyers across the globe lined up to purchase electric vehicles this year, even with elevated sticker costs.
For instance, in Hongguang Mini, the best-selling Chinese EV, the higher battery costs added $1,500.00. This upswing represents a 30.00% jump in the sticker price.
Similarly, leading electric car maker Tesla has passed upbeat costs with a double-digit price jump to consumers.
Likewise, vehicle manufacturers like Mercedes-Benz will likely shift the upturns to customers if their raw material prices keep rising.
Regardless, EV shoppers remained unaffected. Eventually, global sales in the first quarter climbed 120.00%.
Moreover, China’s Nio, Xpeng and Li Auto delivered record EV sales in March. Then, Tesla posted a record 310,000 Q1 figure.
Meanwhile, analysts anticipated battery costs to stay elevated for the following year. Meanwhile, another big drop is probably in store amid the big-ticket investments in battery cell production. These efforts would diversify raw material sources and tip the balance from shortage to surplus.
For example, British battery company Britishvolt will open a 45-gigawatt-hour plant in northeast England in 2024.
Furthermore, the petrol bill savings compared to traditional cars are still compelling. Gasoline and diesel fuel costs for internal combustion vehicles have surged since Russia invaded Ukraine.
Consequently, experts emphasize that environmental worries also urged consumers to choose EVs despite the volatile economics.
EV demand offsets supply concerns
The global EV demand continuously moves faster than expected despite supply constraints.
Subsequently, the industry foresaw a battery cell cost threshold of $100.00 per kilowatt-hour. The upswing signals that EVs have reached price parity with fossil-fuel equivalents.
The concern about the environment has significantly motivated buyers to choose energy-efficient cars over those that burn fossil fuels.
Specifically, younger consumers now create decisions beyond simple economics. They noted that they chose an EV for the planet even though it would be cheaper to drive a gas-powered car.
Furthermore, experts mentioned that the battery market might not see a $60.00 or $80.00 per kilowatt-hour mark again. Nevertheless, it does not indicate that EV adoption will not grow.