Raw Material Prices Skyrocket for EVs

Due to rising raw material costs for automakers, EV prices could significantly rise. Costs of raw materials increased over the two years of the COVID-19 epidemic.

FREMONT CA: The cost of raw materials for electric vehicles more than doubled during the coronavirus pandemic, pushing automakers from General Motors and Tesla to start-ups like Lucid and Rivian to drastically increase the price of new vehicles.

As of May, the average cost of raw materials for an EV was USD 8,255 per vehicle, up 144% from the USD 3,381 per vehicle in March 2020. The cost of materials like cobalt, nickel, and lithium, which are all necessary for the manufacture of batteries used to power electric cars and trucks, led the way. According to AlixPartners, EV-specific costs have climbed from USD 2,000 to USD 4,500 over the last two years.

Cost increases aren't limited to electric vehicles: Raw material costs for traditional vehicles with internal combustion engines have more than doubled during that time period, rising 106 per cent to USD 3,662 per vehicle from an average of USD 1,779 per vehicle in March 2020. Steel and aluminium price increases are driving this increase.

As automakers quickly introduce new EVs over the next few years, costs will increase. By 2024, there will be more than 200 EV models available on the global market, up from 80 last year. After this, EV launches will stall somewhat as a result of the higher expenses, as automakers shift their attention away from bringing electric vehicles to market as rapidly as possible and back to profitability.

Ford’s anticipated profit on the electric Mustang Mach-E has been eliminated due to rising commodity costs. He claimed that although the car was lucrative when it was originally introduced two years prior, things have changed since then. Meanwhile, automakers are raising prices for customers.

The price of an electric Hummer would increase by USD 6,250, as stated by General Motors. The company cited logistics, technology, and part price increases as the causes. Tesla, Rivian, Lucid, and other EV manufacturers have previously disclosed significant price increases for their models.