Goldman Sachs: EV Producers Grapple With Rising Battery Costs

Rising demand for battery metals and minerals will lead to an increase in EV battery costs, Goldman Sachs analysts said in a note, pointing out that this could lead to an increase in EV prices.

"Prices for the three main natural resources have been rising since the start of 2021," the Goldman analysts said, as quoted by CNBC. "We believe that in order to promote sustainable EV industries, some countries may consider implementing policies to increase national stockpiles."

The battery accounts for between 20 and 40 percent of an electric car's total cost, the Goldman analysts noted. With rising demand for EVs, however, the prices of a number of minerals, including lithium, cobalt, and nickel, would rise, too. In the case of nickel, the investment bank believes the metal's price could shoot up by as much as 60 percent.

This price rise will result in an 18-percent increase in EV batteries and, consequently, EV prices. While an 18-percent price increase may not sound like anything too dramatic, for a relatively nascent market-EVs still make up a single-digit percentage of total car sales globally-it could be important.

Nickel is a good example: if prices hit $50,000 per ton, the Goldman analysts said in their note, this could translate into an additional $1,250 to $1,500 for EV buyers. For now, governments, especially in Europe, provide generous subsidies for EV buyers, but it is unclear whether they would be willing to shoulder the additional burden if prices go that high.

Meanwhile, EVs' role in reducing emissions has been challenged again, and one renowned climate expert has called them a "very, very rich world phenomenon," noting that while buying and maintaining an EV when you're wealthy is much easier than if you're poor and living in a city slum.

By Irina Slav for Oilprice.com

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