According to E Source’s report, by 2026, electric vehicle battery prices will increase by 22% due to shortages in key raw materials necessary to produce EV battery cells.
An electric vehicle battery is a collection of cells that store and supply electrical current to power an electric car or truck. The first EVs had lead-acid batteries, but modern vehicles use lithium-ion batteries because they are lighter, hold a charge longer, and can be recharged more times than lead-acid batteries.
The predicted jump in prices is the consequence of a rapid rise in demand for critical raw materials like lithium, which is required to manufacture battery cells.
At the moment, you can get a battery cell for about $128 per kilowatt-hour, and by next year they might cost $110 per kilowatt-hour.
However, according to E Source, the price drops won’t last for long. Battery cell costs are expected to rise 22% by 2023 and peak at $138 per kilowatt-hour in 2026. Yet, they should decline by 2031, reaching $90 per kilowatt-hour.
The predicted battery price increase could also have a major impact on the cost of electric vehicles sold in 2026 (up by $1,500–$3,000 per vehicle). The E Source report also changed its EV sales expectations for 2026, lowering them by 5%–10%.
On that note, executives like Ford’s Jim Farley and Tesla’s Elon Musk have called on the mining sector to increase extraction rates in order to obtain raw materials.