4 ways automakers can offer cheap electric vehicles amid a supply crisis - New Style Motorsport

  • Skyrocketing lithium prices could mean electric car batteries become more expensive.
  • That raises fears that automakers’ plans to make electric vehicles more affordable may be on hold.
  • Here’s how automakers can get around these supply chain hurdles.

Automakers like General Motors, Ford and Lucid say they are very focused on making electric cars more affordable for the masses. But today’s rising lithium prices could cause a spike in overall battery costs that some fear could hamper those plans.

Although electric vehicles may have a lower total cost of ownership considering skyrocketing fuel prices, maintenance costs, and tax credits, they are still more expensive than gasoline-powered cars — the average transaction price for an electric vehicle new was $65,977 (vs. $42,364 for a non-luxury). gasoline car) in March, according to Kelley Blue Book.

“That doesn’t bode well for the effort to electrify a large part of the US car fleet,” said Patrick Anderson, director of industry consultancy Anderson Economic Group.

Automakers say they are eager to change that and have committed to more affordable electric vehicles coming with time and scale. The Biden Administration has pledged $3.1 billion for domestic battery production and invoked the Defense Production Act to preempt supply problems. But with a pending shortage of battery metals, including rising prices for lithium, a critical material in electric vehicle batteries, some of those plans could come to a screeching halt, experts say.

“You have a recipe for an even bigger price differential,” Anderson said, “as well as an even bigger supply chain contraction, which is a double whammy for budget-car buyers who might want to own an EV.”

Adding up

Automakers and industry newcomers have entered the market almost entirely with premium or luxury electric vehicles. GMC’s Hummer is $110,295, while Cadillac’s first EV, the Lyriq, is $58,795. Tesla’s Roadster started at $109,000; The Model 3 was supposed to cost $35,000, but now it’s $48,490.

Meanwhile, Rivian’s debut R1T station wagon starts at $67,500, while Lucid’s flagship Air Dream Edition sedan is $169,000. The Air is expected to drop to $77,400 with the Pure edition.

“A lot of people can build a $169,000 electric vehicle,” Anderson said. “Right now, no one can make a $25,000 EV that exceeds US safety standards and meets even minimal demand in the US market.”

Only recently have electric vehicles started to see lower sticker prices. Volkswagen’s debut ID.4 is priced at $41,995. The base Ford F-150 Lightning pickup is $39,974. This year’s Chevrolet Bolt is $31,000, while the Nissan Leaf starts at $27,400. Elon Musk recently said the $25,000 EV is no longer a priority for Tesla, but Peter Rawlinson says that’s top of mind at Lucid.

In the short term, “I don’t think there’s a way for OEMs to continue building low-cost electric vehicles the way they want,” said Qichao Hu, chief executive of lithium metal battery maker SES.

possible solutions

But Andrew Dillon, innovation fellow at consultancy West Monroe, said that while these battery supply shortage issues could limit the growth rate of electric vehicles, he is not convinced they will affect automakers’ ability to reduce their prices. He also said solid-state battery technology could help automakers deal with scarce materials at high costs.

“That $25,000 EV that Volkswagen promised is very likely to be a reality,” Dillon said, referring to the automaker’s ID.Life concept. “The solid-state battery has the potential to reduce that further. There is no end in sight to the downward trajectory of batteries, and that will be the main driver in making electric vehicles cheaper.”

Hu offered three solutions: regionalize the industry’s battery supply chain, introduce more battery recycling, and pass costs on to the consumer with a battery-as-a-service.

“Battery-as-a-Service allows the increase in the price of the raw material to be passed on to the end users and it does so in such a way that the total cost of ownership will increase over time, but because you are leasing, your cost of ownership will increase. input is actually lower,” Hu said.

Still, consumers won’t be happy if they see any additional costs to switch to electricity.

“I’m worried about a real crisis a few years from now,” Anderson said, “and most consumers still don’t have a cost-effective option that meets their needs and budget.”

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