The transition to electric cars is in jeopardy as battery prices rise for the first time in years

The battery prices that power almost everything from small electronic devices such as smartphones to cars increased in 2022 for the first time since BloombergNEF (BNEF) began tracking them, and they will probably not fall next year. 

The general average cost of lithium-ion batteries increased by 7% to $151 per kWh. In the 12 years that BNEF has been examining battery prices, the annual increase had never been recorded before, but instead a sharp decrease with the increase in production. But the current rising prices of lithium, nickel and other metals that batteries contain has stopped the decline, and according to BNEF, prices in 2023 will remain in the $152 per kWh range. It is not expected that prices will decrease again until 2024 when more lithium production is expected.

The cost of $151 is an average price in several industries that use lithium-ion batteries, including large units connected to the electricity grid to avoid blackouts. The average price for electric vehicles was $138 per kilowatt hour.

The higher cost of batteries will come at a sensitive time. Car manufacturers around the world are launching new mass-market models of electric cars and trucks, and high battery cost is one of the main reasons why electric vehicles are more expensive than comparable gas-powered cars. This electric vehicle situation is expected to disappear when the cost of batteries drops below $100 per kWh, which as previously predicted by BNEF could happen in 2024. However, now BNEF predicts that the tipping point will occur in 2026.