Lithium Prices Point To Rising EV Prices In 2022

Electric vehicle prices could further rise in 2022 as the supply of lithium carbonate, a key ingredient in battery making, struggles to keep up with the sharp rise in demand.

What Happened: Benchmark price of lithium carbonate soared to a new high in 2021 and price in China was just over $41,060 a ton, which is more than five times higher than last January and above previous records, Nikkei Asia reported.

China is the world’s biggest battery-producing nation.

Prices of other commodities that go into battery making for electric vehicles have been rising as well. Cobalt prices have doubled since last January to $70,208 a ton, while nickel jumped 15% to $20,045.

See Also: Tesla, Nio Supplier CATL To Invest $2.1B In New Lithium Battery Project

Lithium carbonate supply is expected to reach 636,000 metric tons this year, up from an estimated 497,000 metric tons in 2021, the report noted — citing S&P Global Market Intelligence, adding that both demand and supply are climbing higher.

Why It Matters: Electric vehicle makers, as well as legacy automakers, across the globe, are rushing to secure battery supplies as they set steep targets.

Tesla Inc TSLA, the global electric vehicle leader, crushed delivery estimates for 2021 and is expected to see a further jump in capacity this year as it starts operations at Giga Texas and Giga Berlin.

Ford Motor Co. F is pumping $30 billion into electrification efforts by 2025. The automaker in September revealed an $11.4 billion plan to build two new battery factories in a joint venture with South Korea's battery maker SK innovation. The project is expected to add 11,000 jobs.

See Also: Tesla, NIO Partner CATL Also Has A 'Business Relationship' With Ford

The automaker expects 40% to 50% of its global vehicle volume to be fully electric by 2030.

Volkswagen Group VWAGY and General Motors Co GM have set similar targets. 

Price Action: Tesla shares closed 1.3% lower at $1,056.8 a share on Friday.