Monday, January 17

Bad news for the electric car: the price of batteries is falling, although slower than expected (and than desirable)

The battery hogs approximately 40% of the cost of an electric car. Making it cheaper so that many more people will be able to get one in the future necessarily requires drastically slashing the price of this component, a goal that the industry as a whole has viewed with optimism for the last decade. However, the mood is starting to heat up as the latest forecasts invite us to moderate our enthusiasm.

The report dedicated to the evolution of the price of batteries that has been published Bloomberg it reflects that the downward trend is slowing down. In the graph that we publish below these lines, we can see that during the first half of the past decade the cost of batteries fell from 10 to 35% approximately every year. However, as of 2017 this decline began to moderate until reaching the Pyrrhic drop of 6% that it has experienced between 2020 and 2021.

The battery accounts for 40% of the cost of an electric car. If we want them to be cheaper it is essential to reduce the price of this component

The average price of kWh last year amounted to 140 dollars (approximately 123 euros), and, although forecasts indicated that in 2021 it would fall by 9%, it will finally be set at 132 dollars (116 euros approximately), thus consolidating that 6% decline which we have talked about in the previous paragraph.

Source: Bloomberg

The problem is that, as we told you in the article we published at the beginning of November, this downward trend seems to be about to be interrupted. And it is that the forecasts of Bloomberg analysts defend that for the first time the price of batteries will not only not decrease in 2022, but will increase approximately 3 dollars (about 2.64 euros) per kWh. It does not seem like much, but in this context the change in trend is more relevant than the amount of the increase itself.

The solution is to modify the chemistry of the batteries, and silicon is an ally

The reason why the cost of battery production is increasing is primarily due to the rising cost of the raw materials used in the manufacture of the cathode and electrolyte. Cobalt, nickel and lithium, which are three of the most demanded chemical elements by this industry, are touching all-time highs, and, as might be expected, battery manufacturers are passing this increase on the price at which they sell their production.

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During the second half of 2021 the upward trend in prices has intensified, which places us on the threshold of a 2022 in which nothing seems to indicate that the cost of raw materials is going to moderate. Rather the complete opposite; most likely, prices will continue to rise and trigger the rise in the cost of kWh that Bloomberg analysts have predicted.

Silicon is a very abundant and relatively inexpensive chemical element, making it a clear candidate for mastering battery chemistry.

This forecast has prompted most battery manufacturers to invest in research for the purpose of modify its chemical composition to reduce the presence of the elements that are becoming more expensive. Or even to get rid of them completely as much as possible. There is still a lot of work to be done on this path, but it seems that silicon could play an important role in this transition towards batteries in which cobalt and nickel, among other elements, should lose a lot of specific weight.

Despite the dark clouds looming over all industries that depend to a greater or lesser extent on batteries (some even they are failing worse of this setback than the automobile industry), in the medium term analysts are optimistic. And it is that they predict that in 2030 kWh will cost half that in 2021. Hopefully it will be like that. At the end of the day the process of electrification of the means of transport in which we have embarked to reduce polluting emissions requires it. Cross our fingers.

Cover image | Kindel Media

Via | Bloomberg