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Battery prices for electric vehicles are seeing a “ridiculous” increase on the back of soaring raw material prices, and carmakers will soon have to raise prices if they haven’t done it yet, according to the top executive of Chinese electric vehicle manufacturer Li Auto Inc.
“The cost of batteries in the second quarter rose by a very ridiculous amount,” Bloomberg quoted Li Auto’s chief executive officer Li Xiang as saying on his Weibo account this weekend.
Because of rising costs for raw materials, Contemporary Amperex Technology Co. Ltd. (CATL), the largest battery maker in the world, already announced today in a statement to Reuters that it had raised the prices for some of its battery cells, without giving additional details of the price hike.
China’s Li Auto has not yet announced any price increases for its EVs.
Rising costs for raw materials and logistics have already made Tesla raise its prices for China and the United States. This month, Tesla raised its prices for the second time in less than a week.
Costs of raw materials and key metals for EV batteries, such as nickel and lithium, have skyrocketed since Russia’s invasion of Ukraine at the end of February.
“Tesla & SpaceX are seeing significant recent inflation pressure in raw materials & logistics,” Elon Musk tweeted last week.
Lithium prices were soaring even before the Russian war in Ukraine. Lithium prices hit a record high at the start of 2022, and analysts said back then that the rally had legs to continue even higher. The surging price of one of the battery pack’s key metals was already exerting enormous cost pressure on battery production, while demand continues to soar as nearly every major carmaker is developing electric vehicles and aiming to significantly boost zero-emission car sales this decade.
Now the war in Ukraine is accelerating the rise in metals and minerals, and the soaring prices of batteries and of metals for all other components of cars, including aluminum, have already started to translate into higher EV prices, potentially slowing down the speed of EV adoption.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.