Falling Lithium Prices are Making Electric Cars More Affordable

The New York Times reports:Since January, the price of lithium has dropped nearly 20%, according to Benchmark Minerals, while sales of electric vehicles have soared. The price of cobalt, another important battery material, has fallen by more than half. Copper, essential to electric motors and batteries, has slipped by about 18%, at a time when U.S. mines and copper-rich countries such as Peru are struggling to increase production. The price moves have confounded many analysts who predicted costs would stay high, or climb higher, slowing the transition to cleaner forms of transportation. Instead, the drop in commodity prices has made it easier for carmakers to cut prices for electric vehicles. This month, Tesla lowered the prices of its two most expensive cars, the Model S sedan and Model X sport utility vehicle, by thousands of dollars. That followed cuts in January by Tesla to its more affordable Model 3 and Model Y, and by Ford Motor to its Mustang Mach-E. The average price of an electric vehicle in the United States fell by $1,000 in February compared with January, according to Kelley Blue Book. "For electric vehicles, the major roadblock is cost," said Kang Sun, the CEO of Amprius Technologies, a young battery maker that this month announced plans for a factory in Colorado. The falling price of lithium, he said, "is going to promote EV sales." Sun said he thinks prices could fall much further because demand for the metal has not risen as fast as some in the industry expected.... Ryan Melsert, CEO of American Battery Technology, attributed the recent decline in lithium prices to temporary factors like a seasonal slowdown in electric vehicle sales in China. "We expect to see very high prices for the foreseeable future," Melsert said. Vivek Chidambaram, the senior managing director for strategy at Accenture, the consulting firm, also expects the decline to be temporary. Lithium prices have fallen because sales of electric vehicles, while still brisk, are not growing as fast as automakers expected, he said. That has led suppliers to produce more than is needed. The article notes America's Department of Energy is providing $3 billion in grants to create a domestic battery supply chain - partly because the supply of lithium has to increase 42-fold by 2050, according to the State Department's undersecretary for energy. "We have to find additional sources of supply because 42 times is a lot," he tells the Times. "Right now, we don't have enough."

Read more of this story at Slashdot.