Rising Battery Costs Hit Carmakers, Threaten Climate-Change Push

• Rising commodities put the brakes on ever-cheaper batteries

Soaring commodity prices and supply chain bottlenecks threaten to push up the cost of batteries seen as crucial in the fight against climate change.

BNEF still predicts battery prices can fall as low as $100/kWh by 2024, though that timing is now less certain. Analysts say that target could be pushed back two years if inflation pressures persist, hurting the economics of energy storage technology.

Even though battery prices dropped 6% this year to a record-low $132/kWh, costs had already started rising in the second half, according to BNEF. One reason is the higher cost of lithium iron phosphate after Chinese producers raised prices by as much as 20% since September. BNEF expects some constraints, such as China’s production curbs due to tight power supplies, to ease by early 2022.

Battery producers in China, the top electric-vehicle market, have been raising concern for months over tight supply and rising costs of some raw materials.

This year also showed an increase in the relative cost of cells versus the packs they help constitute. For battery electric vehicle packs in particular, cells now account for 82% of the total pack price, BNEF’s report said. Battery packs were the cheapest in China, at $111/kWh. U.S. and European prices were 40% and 60% higher, respectively.