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: Are you ready to switch to an EV? Here’s why you may find yourself priced out of the market


It wasn’t supposed to be this way.

This year likely will be the first that electric-vehicle battery costs will go up, rather than continuing the steady decline that they’ve been on for more than a decade.

And EV buyers are seeing the result: several auto makers, from newcomers such as Rivian Automotive Inc.

to established players such as Tesla Inc.
have raised their EV prices. The move has affected all models, from mass-market electric sedans to coveted muscle cars with deep order books and even Ford Motor Co.’s

EV version of the F-150 pickup truck, the vehicle that has reigned supreme as the best-selling vehicle in the U.S. for decades.

Supply-chain snags and shortages have kept auto prices higher and inventories depleted for the better part of two years. For EVs, however, there’s another layer of complexity, as makers are scrambling to secure lithium and other metals used in the production of EV batteries amid a renewed push to make them mainstream.

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“Prices definitely are going up and the cost of the metals that go in batteries has increased dramatically,” said Michelle Krebs, an analyst with Cox Automotive.

The average price of an EV in August was $61,955, up 7.8% from $57,472 in August 2021, according to That compares with an average of $47,195 for all vehicles in August.

Edmunds gathers prices of vehicles sold through dealerships, so Tesla EVs are not included in those calculations as it sells its cars directly to consumers.

The Edmunds analysts estimated that the average EV price would hover around roughly $65,000 with the Teslas factored in. Rivian EVs are also not in the estimates due to their still-low volume.

“Price is the No. 1 obstacle to mass EV adoption,” while other barriers, such as range and charging anxieties, have become less of a concern for drivers, Krebs said.

Prices of lithium compounds and other metals used in batteries are up by triple-digit amounts, with Tesla planning to enter the lithium refining business.

China, the largest global EV market, “dominates the supply chain for the manufacture of lithium-ion batteries,” including the processing of minerals and raw materials, the Energy Department said in a recent note.

The U.S. “relies on international markets for processing of most lithium-battery raw materials,” it said in a report outlining policy steps to grow out of that dependency.

Lithium-iron phosphate battery-cell costs are up 84% relative to May 2021 and peaked in March at $153 kWh before coming down to about $143 kWh in July, said Yayoi Sekine, head of energy storage at BNEF.

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Those prices are based on averages for raw-material spot prices, and actual prices may be lower since many battery makers and auto makers have supply agreements in place to smooth over the volatility, she said.

Battery costs are the lion’s share of EV costs, making up about 30% to 50% of a passenger EV as the share varies by vehicle model and range.

There’s little relief in sight for this year.

“Supply-demand balance for all battery metals, lithium, cobalt, nickel, aluminum, is tight for 2022,” Sekine said. “Lithium carbonate costs have been most impactful on battery prices, and BNEF expects prices will remain elevated for the rest of 2022 and 2023.”

Mining capacity is expected to grow next year and in 2024 after industry investments, but “the industry may continue to be constrained in the long-term if additional mining supply does not ramp up,” Sekine said.

General Motors Co.

unveiled the Chevrolet Equinox compact electric SUV last week, promising it would cost around $30,000, slightly more than the Chevy Bolt but offering a body style that has been popular in the U.S. for decades.

There will be a wait, however, as the EV is expected to enter production in 2023 for some models and expand to a full lineup by 2024.

EV buyers are at the top of income brackets, and pricey vehicles such as the Rivian and Ford electric pickup trucks have order books that are likely to be “pretty hefty for quite some time,” Cox Automotive’s Krebs said.

Demand has not been an issue and consumers will see cheaper options rolling, she said.

A tipping point?

Venkat Srinivasan, director of the Argonne National Lab’s Collaborative Center for Energy Storage Science, sees a tipping point of sorts for EVs.

“We are still scratching the surface as EV market share goes,” but there are two important changes, he said.

“People are viewing EVs as one of the options. They are seeing more of them on the road. They are seeing their neighbors buy an EV, so there’s familiarity,” Srinivasan said. “They are also seeing more and more that we have to do something about the climate emergency.”

The share of EVs on U.S. roads has steadily increased through the years. says that market share hit 4.8% from January to August, compared with a 2.3% market in the same span in 2021.

Moreover, the monthly national EV market share has remained above 5% since May of 2022. Wall Street expects that market share to grow considerably thanks to California’s recent move to ban sales of new gas-powered vehicles by 2035.

The supply chain for batteries is trying to catch up with the increased demand, and it takes time to build that chain, Srinivasan said.

Innovations in battery composition are in the works. Tesla said in October 2021 that it was shifting to a cobalt-free battery chemistry for all its standard-range vehicles, rather than an option just for certain Model 3 trims.

So the move toward using less cobalt is here “as we speak,” Srinivasan said. Efforts toward using less nickel might take a few years to pan out, and using silicon for battery anodes is emerging as a “promising” alternative, he said.

Research into solid-state batteries, which are safer and more energy dense, among other advantages, is ongoing but likely still years away, he said.

Solid-state batteries are called that because they replace liquid or gel electrolytes with a solid one such as ceramic.

Batteries costing about $65 per kWh are likely to be powering cars most people would be able to afford, Srinivasan said.

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