Low lithium prices and the affect of electric vehicles.
Over the past decade, the popularity of electric vehicles (EVs) has surged, thanks in part to the declining cost of lithium-ion batteries that power these cars. However, the falling lithium price in recent years has raised questions about how it will impact the affordability of electric vehicles in the future.
Lithium is a crucial component of the batteries that power electric vehicles, and its price has been on a downward trend since 2018, dropping from a high of over $20,000 per metric tonne to just over $10,000 per metric tonne in 2021. While the reasons behind the drop in lithium prices are complex, one of the primary factors is an increase in supply as new mines have opened up and production has ramped up in existing mines.
At first glance, it may seem like the falling price of lithium would be good news for the electric vehicle industry, as lower battery costs would make electric cars more affordable and accessible to a wider range of consumers. However, the relationship between lithium prices and EV affordability is not that straightforward.
The cost of lithium-ion batteries is just one of the many factors that determine the price of an electric vehicle. Other factors include the cost of the car's production, marketing, and distribution, as well as government incentives and subsidies for EVs. While battery costs have been a significant factor in the past, they are expected to account for a smaller percentage of an EV's total cost as battery technology improves and production scales up.
Furthermore, while the price of lithium may be falling, the cost of other materials used in EV batteries, such as cobalt and nickel, has not decreased at the same rate. These materials are also crucial for battery production and can account for up to 40% of the total cost of a lithium-ion battery.
Another important factor to consider is the relationship between supply and demand. While the supply of lithium may be increasing, so is the demand for electric vehicles. In fact, some analysts predict that the demand for lithium-ion batteries could triple by 2025 as more automakers shift their focus to producing EVs. If demand continues to outstrip supply, it could lead to higher prices for lithium and other materials used in battery production, which could offset any savings from falling lithium prices.
As of yet, at take my car away, we have not collected a full electric vehicle for end of life.
Overall, while the falling price of lithium is a positive development for the electric vehicle industry, it is unlikely to have a significant impact on the affordability of EVs in the near term. The cost of other materials used in battery production, as well as the cost of production, marketing, and distribution, will continue to be important factors in determining the price of electric vehicles. Additionally, the demand for electric vehicles is expected to grow, which could put upward pressure on the price of lithium and other battery materials.