Lithium prices putting pressure on electric vehicle costs

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.)