L R AS Published on Monday 13 December 2021 - n° 386 - Categories:storage, storage area, battery materials
The price of batteries is falling, but their price depends on the price of lithium!
Battery pack prices fall by 6% in 2021 to an average of $132/kWh according to BloombergNEF. Commodity price increases in the second half of the year are starting to hurt
Battery pack prices for electric vehicles were $118/kWh on a volume-weighted average basis in 2021. Average battery cell prices were only $97/kWh. This indicates that, on average, cells account for 82% of the total pack price. Over the past two years, the ratio of cell to pack costs has moved away from the traditional 70/30 split, due to changes in pack design, such as the introduction of pack cells.
Battery packs are cheaper in China at $111/kWh. In contrast, packs in the US and Europe cost 40% and 60% more respectively. This reflects the relative immaturity of these markets, the diversity of applications and, at the high end, the low volume and custom orders.
The decline in prices is due to the development of lithium iron phosphate (LFP) cathodes, and the reduced use of cobalt. On average, LFP cells were almost 30% cheaper than NMC (nickel, manganese, cobalt) cells in 2021.
Since September, the Chinese have increased the price of LFP by 10-20%.
The average price of packs would have to fall below $100/kWh by 2024 to develop sales of electric vehicles at the same price and with the same profit margin as those of combustion engines.
Only the recovery of metal prices could bring prices above $135 by 2022. This would postpone the crossing of the $100/kWh mark by two years. For example, the price of an NMC 811 cell (nickel 8, manganese 1, cobalt 1) is $10/kWh higher in Q4 than it was in the first three months of the year, with the price approaching $110/kWh. This makes it difficult for carmakers, especially in Europe where they need to increase sales to meet average fleet emissions standards. These manufacturers may now have to choose between cutting their margins or passing on the costs, at the risk of deterring consumers from buying an EV.
BloombergNEF November 30, 2021
Editor's note Clearly, intentions should not be confused with reality.
Intentions are manifested in the announcement of several (if not dozens) of gigafactories of battery production to be built in the next few years to meet the expected production needs of the millions of electric vehicles. As all these batteries will run on lithium, it will be necessary to multiply the world's lithium production by an undetermined but very high figure. This product is rare and expensive. Above all, it is subject to price fluctuations on the metal markets.
Thus, all it takes is for the world's raw materials to heat up in the second half of 2021 for lithium to rise significantly in value. What will happen when the various factories want to buy lithium simultaneously to ensure their production rate? The price of lithium will not then allow the price of the battery to fall below $100/kWh, which would be the limit of profitability. Unless other metals/materials can be found to replace lithium, or batteries make huge efficiency gains...
Thus, the industrial world is embarking on the production of batteries and therefore the assembly of electric vehicles without knowing the cost price of an essential component, the battery, which represents 30% of the price of a vehicle!
On the one hand, the public authorities (the European Commission and governments), under pressure from environmentalists, want to impose electric vehicles. On the other hand, reality is taking its revenge by making electric vehicles unaffordable (except with substantial and unsustainable government subsidies).