The price of batteries for Electric Vehicles is set to rise in 2022 after a decade of sharp decline.

The price of batteries for electric vehicles looks set to rise in 2022 after many years of sharp decline. The supplies of lithium and other raw materials fail to keep up with huge demand. While mining companies scramble to increase production from existing facilities and develop new sources of supply, benchmark prices of lithium carbonate ended 2021 at records.

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Since 2013, the Battery pack costs have been declining sharply, something that is looking to change due to the materials supply.

The biggest battery-producing country in the world, China, a ton costs 261,500 yuan (over $41,060), 5x higher than a year ago. Other commodities used in cathodes, the most expensive part of a battery, have also been rising: The price of cobalt has doubled since last January to $70,208 a ton, while nickel jumped 15% to $20,045.

The Chinese Independent battery makers CATL – the world’s biggest battery producer – is racing to increase their sources of supply. The country accounts for over 65% of global battery production and over half of lithium chemical production, a dominance that worries many in the car industry at a time of geopolitical tensions.

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“No country can compare to China in terms of cost competitiveness,” said the Japanese lithium trader. “There are certainly geopolitical or China risks in the supply chain.”

Tesla in 2020 secured its own rights to extract lithium from clay deposits in Nevada, an early example of an automaker working to cut out the middleman. Also in 2020, BMW signed a 5-year cobalt supply agreement with Moroccan producer Managem in a deal worth $113 million.

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