Sep 21, 2022 - Economy

Lithium prices putting pressure on electric vehicle costs

Lithium carbonate price
Source: Benchmark Mineral Intelligence; Chart: Madison Dong/Axios Visuals

Lithium prices have more than quadrupled over the last year as the rush from automakers to produce electric vehicles gains momentum.

Why it matters: The spike in prices for raw lithium — a key material used in batteries — is fueling a rise in the price of EVs, hampering their appeal to consumers already dealing with inflation elsewhere.

  • The global weighted average price of lithium carbonate was $59,928 per metric ton in August, up from $13,924 in August 2021 and $6,128 in August 2020, according to Benchmark Mineral Intelligence.

Threat level: The price would be even higher had the Chinese Yuan not weakened against the U.S. dollar in recent months, Benchmark senior price analyst Daisy Jennings-Gray tells Axios in an email.

  • “Lithium is really following the Chinese EV market and that’s just taking off,” Edward Meir, a metals consultant at brokerage ED&F Capital Markets, told the Wall Street Journal. “This is a preview of what could await us in the U.S."

By the numbers: Average EV prices rose 15.6% in August, compared with a year earlier, to more than $66,000, according to Kelley Blue Book. That's about $18,000 more than overall average new vehicle prices.

What to watch for: Whether automakers can achieve their goals of lowering EV costs while lithium prices remain elevated.

  • General Motors recently announced plans for the 2024 Chevrolet Equinox EV to carry a starting price of "around" $30,000.

(Editor's note: Kelley Blue Book is owned by Cox Enterprises, which recently acquired Axios.)

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