As of May this year, the average raw material cost per EV totaled $8,255, up 144% from $3,381 in March 2020, with materials such as cobalt, nickel and lithium costing the most, all of which are Necessary for the production of batteries for electric vehicles. Electric vehicle-specific costs have risen from about $2,000 to $4,500 in the past two years, according to AlixPartners.
The rising cost of raw materials for electric vehicles (Credit: AlixPartners)
It’s not just EVs that are costing up, though, raw material costs for conventional combustion-engine vehicles have more than doubled during the Covid-19 period to $3,662 per vehicle, compared to the March 2020 average of $1,779 per vehicle an increase of 106%. Rising prices for steel and aluminum were the main reasons for this increase.
The soaring cost of raw materials for cars comes as automakers plan to roll out new electric vehicles aggressively in the coming years. AlixPartners predicts that by 2024, the number of electric vehicles on the global market will increase from 80 last year to more than 200.
As a result, AlixPartners expects that rising costs will lead to a relative slowdown in the rollout of EVs, as automakers won’t bring EVs to market sooner, but instead refocus on profitability.
Raw material cost trends for traditional fuel vehicles (Image: AlixPartners)
Ford Chief Financial Officer John Lawler said last week that the company’s profit forecast for the Mustang Mach-E model was offset by rising commodity costs. While the car was profitable when it first launched in late 2020, that has now changed.
At the same time, car companies are also raising the price of their models. GM announced on Friday that it would increase the price of the electric Hummer by $6,250. The automaker blamed the price increase on parts, technology and logistical issues.