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Illustration: Eniola Odetunde/Axios

The secret to affordable electric vehicles is cheaper batteries. But after years of falling prices, battery costs are now headed in the wrong direction.

Why it matters: Costlier batteries could drive up the price of electric vehicles — threatening the auto industry's transition away from fossil fuels, and, in turn, society's fight against climate change.

Driving the news: Soaring costs for minerals and other raw materials could push the average price of a lithium-ion battery pack to $135 per kilowatt-hour in 2022, according to researchers at BloombergNEF who specialize in studying the energy transition.

  • The projected 2.3% hike would mark the first price increase in a decade.

What they're saying: "This creates a tough environment for automakers, particularly those in Europe, which have to increase EV sales in order to meet average fleet emissions standards," says James Frith, BNEF's head of energy storage research, per Bloomberg.

  • "These automakers may now have to make a choice between reducing their margins or passing costs on, at the risk of putting consumers off purchasing an EV."

What's happening: Electric vehicles are about to flood dealer showrooms.

  • Last year, there were just 24 EV models for sale in the U.S.
  • By 2025, consumers will have 146 EV models to choose from, according to IHS Markit's forecast.

Yes, but: High sticker prices, along with worries about the availability of charging stations, are still obstacles to public acceptance.

  • Automakers have responded by introducing cars with a longer driving range — which requires a larger battery.

Where it stands: Battery pack prices have been falling steadily since at least 2010, when the average cost was $1,200 per kilowatt-hour.

  • The latest data shows battery prices fell another 6% from last year, to $132 per kilowatt-hour.
  • The industry has been aiming for $100 per kilowatt-hour, which would put the purchase price of an EV on par with their gasoline counterparts.

What to watch: BloombergNEF says that $100 target is still possible by 2024 but could take a few years longer because of the higher commodity prices.

Editor's note: This story was originally published on Dec. 1.

Go deeper

Inflation hit 7% in December, highest since 1982

Source: U.S. Bureau of Labor Statistics; Chart: Axios Visuals

Consumer prices rose faster in 2021 than they had in any 12-month period since 1982, according to December numbers released Wednesday that showed the inflationary surge continued at the end of the year.

  • The Consumer Price Index rose 0.5% in December and 7% for the full year. Even excluding volatile energy and food, those numbers were 0.6% and 5.5%.

Inflation microcosm: Used-car price surge continues

Data: U.S. Bureau of Labor Statistics via FRED; Chart: Axios Visuals

Consumer Price Index data released Wednesday showed used-vehicle prices continue to surge. As of December, they were up 37% compared to the previous year.

Why it matters: Analysts have been watching used-vehicle prices as a microcosm of the broader U.S. inflation story, encompassing both the disarray of global supply chains and the surge in demand for goods.

Ben Geman, author of Generate
Jan 13, 2022 - Energy & Environment

Battery startup QuantumScape's new move

Photo Illustration: Pavlo Gonchar via Getty Images

The energy storage heavyweight Fluence and the solid-state battery startup QuantumScape Thursday morning announced a multiyear agreement to test and deploy QuantumScape lithium-metal tech in stationary applications.

Why it matters: Storage growth is important to enabling high levels of renewables penetration and also helps aid grid reliability. Solid-state battery tech holds the promise of higher energy density and other benefits.