Are EV Makers Assuming Too Much Regarding Battery Prices?

Electric vehicles (“EVs”) are poised to replace internal-combustion-engine vehicles over the next couple of decades. EVs run on clean, renewable energy and produce minimal emissions at the tailpipe, but there’s one caveat: they are too expensive for most consumers. Unlike internal-combustion-engine vehicles, EVs are powered by rechargeable lithium-ion batteries that require minerals such as cobalt, nickel, lithium, and manganese to function. These minerals need to be mined, processed and converted into pure chemical compounds before use in batteries — a process that can cost a pretty penny.

The consensus has been that, over time, battery prices would fall, making it profitable for EV makers to produce more affordable electric vehicles. However, a new research note from Benchmark Mineral Intelligence, a battery-supply-chain specialist and price-reporting agency, states that prices for EV batteries will not fall indefinitely. Research shows that that battery prices were above $1,100 per kilowatt-hour in 2010, falling by 87% to 156/kWh in 2019; projections indicate that by 2023 prices will average $100/kWh.

This is the timeline many EV makers have in mind, expecting that by 2024, producing an EV will cost the same as producing an internal-combustion-engine car, assuming that battery prices fall as projected. Prices for lithium-ion battery cells have fallen to around 100/kWh, says Andrew Leyland, head of strategic advisory at Benchmark. However, some industry forecasts have projected prices as low as $66 to $70/kWh. Leyland cautions against putting much faith in such projections, stating that many automotive board members expect battery prices to keep falling without understanding the supply chain.

Battery prices become volatile right at the mineral extraction stage, he explains, with supply, demand, inventory level, and cost influencing the final price. With several countries looking toward achieving carbon-free economies over the next few decades, demand for EV batteries as well as stationary power-storage solutions will increase, thus increasing the demand for the raw materials needed. Since the supply of these precious minerals isn’t expected to increase in the near future, their prices are unlikely to stay down for long.

To meet the increasing demand for lithium-ion batteries, the supply of lithium will have to double every four to five years, Benchmark estimates. Other minerals, such as nickel and manganese, will have to increase by an even greater magnitude to meet demand. Unfortunately, the agency says, the current low prices give little incentive for launching new mining projects.

Still on the matter of the electric vehicle sector, there is a proposed merger in the works between Net Element (NASDAQ: NETE), a financial tech solutions firm, and Mullen Technologies Inc., an EV manufacturer whose operations are based in Southern California.

NOTE TO INVESTORS: The latest news and updates relating to Net Element (NASDAQ: NETE) are available in the company’s newsroom at http://ibn.fm/NETE

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