The cost of lithium, a key element in all EV batteries, has significantly decreased, making electric vehicles relatively affordable. This is great news for consumers. However, experts differ on the duration for how long low costs will persist. Several observers were surprised by the sudden changes because they had assumed that the prices would remain high or even increase, impeding the switch to greener transport methods, a crucial step in the fight against global warming.
The decline in material costs has made it simpler for automakers to lower the cost of electric cars. For example, this year saw Tesla reduce the prices of two vehicles in its lineup — the Model X sport utility and Model S sedan — throughout the month of March by significant fractions. This came after price cuts in January on two other more affordable vehicles, the 3 and Y models.
Cost is the main obstacle for electric cars, according to Kang Sun; hence, the decline in lithium prices is likely to encourage electric vehicle sales. Sun believes costs might decrease far more since the metal’s demand hasn’t increased as quickly as industry experts anticipated.
There are differing views on what led to the latest decline in lithium pricing and also on its future prices, just as there are for every other product. While a few analysts argue that the decline in lithium prices was brought on by the slowdown in global economic development alongside the end of subsidies for EV purchases in China and Europe, others are of the view that the decline was evidence that the lithium crisis was being resolved more quickly than several analysts had anticipated, thanks to new mining and processing facilities.
Lithium prices, despite their steep decline, are still high, making the extraction and refining of this metal an incredibly profitable venture that has drawn in banks and investors to fund or loan mine and refining enterprises. More funding should come from the federal government.
Lithium is widely available across the globe. Yet up until the past one or two years when EV sales started to soar, it was not seen as particularly valuable. The auto sector hurriedly opened additional mines to be able to meet the rising demand, and refineries expanded their ore-processing capacity.
According to Bold Baatar, the pricing is not being driven by mining but rather by the accessibility of processing plants. There is currently no technology that could make mass production of automotive batteries without lithium. Because of this, a few analysts believe that the price of lithium will drop further as in 2020 when prices dropped below $10/kg.
As electric vehicles become more affordable, we can expect models from various manufacturers such as Fisker Inc. (NYSE: FSR) to become commonplace on roads around the world as ICE vehicles fall out of favor.
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