Lithium, the mineral used in batteries to power electric vehicles, smartphones, laptops and all sorts of gadgets, has seen record gains this year as the world moves towards a “green” future. But as the global economy decarbonizes, battery prices have risen annually for the first time since BloombergNEF began tracking the market in 2010.
After a decade of deflation, the volume-weighted average price of lithium-ion battery packs across all industries has risen to $151 per kilowatt-hour in 2022, a 7% increase over last year. BloombergNEF predicts that prices could continue to rise next year.
“Never before in the 12 years that BNEF has been researching have battery prices seen annual gains, instead falling sharply as production grew,” Bloomberg said.
Rising costs of lithium, nickel, cobalt, aluminum and manganese – key metals used in battery manufacturing – have driven up the prices of lithium-ion battery packs.
Just look at the lithium price index — prices are out of control…
“It is not until 2024, when more lithium production is expected to come online, that prices are expected to decline again,” Bloomberg explained.
The rise of lithium-ion battery packs could be the first signal in the energy transition that prices for decarbonizing economies will be expensive.
“With the advent of electromobility and all this excitement about lithium, the world needs new sources,” Daniel Jimenez of consultancy iLiMarkets told the FT recently. “Whoever produces lithium in the next three years will generate abnormally high margins.”
But until new supply comes online, lithium-ion battery packs will continue to grow, which has already raised concerns about the affordability of electric vehicles.
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