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EV battery costs are soaring with metal prices, according to Liberum

Published: 12:24 16 Mar 2022 GMT

SpaceX -

Inflationary pressures pushing up the prices of commodities have caused the costs involved in producing an electric vehicle (EV) battery to soar, potentially hitting EV manufacturers such as Tesla Inc (NASDAQ:TSLA), it was claimed today.

Broker Liberum said the cost of metal in a 60KWh battery using NMC cathodes, essentially batteries made up of lithium, nickel, cobalt and manganese,  is now US$4,946 or nearly four times last year's US$1,398.

For EV manufacturers such as Tesla, Lucid Group Inc (NASDAQ:LCID), and NIO Inc (NYSE:NIO), that translates to “more than 50% of the battery cost” compared to the historical norm of 10%, said the broker.

It notes that many battery and EV manufacturers tend to purchase these metals on multi-period contracts, “so the impact is not immediate.”

Tesla this week hiked its prices for the second time in days, with boss Elon Musk citing higher material prices for increases of both its Model 3 and Model Y vehicles.

Both were hit with a roughly 5% hike, with the Model Y Long Range now costing US$56,108, representing a US$4,408 increase from this time last week.

Consumers wishing to purchase the Model 3 will be forced to fork out US$57,676 after a similar price increase.

Musk confirmed in a tweet that “Tesla and SpaceX are seeing significant recent inflation pressure in raw material and logistics.”

The price of lithium per kilo has been on a steady incline since September last year when it roughly cost US$12/kg.

It is now touching US$80/kg, with the price climbing about 8% since the start of Russia’s invasion of Ukraine.

Nickel, meanwhile, is now at US$43/kg or nearly double the price on 24 February while cobalt is selling for US$82/kg, a $10 increase since Russian forces first entered Ukraine.

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