According to reports, EV battery prices may spike up to 22% by 2026 as the shortages of raw materials continues.
The cost of production of electric vehicles may surge over the next four years, as reported by CNBC, citing a new report by E Source. This is due to the scarcity of raw materials needed to produce EV battery cells.
According to the report, E Source estimates that battery cell prices are expected to rise 22 percent from 2023 to 2026, reaching $138 per kilowatt-hour, before falling steadily until 2031, possibly as low as $90 per kilowatt-hour.
The increase in price results from the growing demand for raw materials, like lithium.
“There is a literal shortage of lithium, and there’s going to be an even sharper shortage of lithium. You cannot make the batteries if you don’t mine the lithium,” said Sam Jaffe, Vice President of battery solutions at E Source.
He tweeted last April: “Price of lithium has gone to insane levels! Tesla might actually have to get into the mining & refining directly at scale, unless costs improve.” He added, “There is no shortage of the element itself, as lithium is almost everywhere on Earth, but pace of extraction/refinement is slow.”
According to E Source, the predicted rise in battery costs could push the price of EVs sold in 2026 up anywhere between $1,500 and $3,000 per vehicle. The company has also lowered its electric vehicle sales forecasts for 2026 by 5% to 10%.
Surprisingly, even though there is a strong demand for the raw materials needed to produce EVs, E Source said there’s a low number of mining projects.
“With the price of lithium having risen nearly 900% in the last eighteen months, we had assumed the capital markets would unleash the floodgates to establish dozens of new lithium mining projects. Instead, the investments have come in dribs and drabs, with most of it originating from China for the Chinese supply chain,” E Source said.