Prior to the onset of the COVID-19 pandemic and subsequent supply chain challenges, automotive production was humming along just fine. However, things have changed drastically over the past two years or so, as numerous constraints have slowed production to a crawl, leaving dealer lots empty and prices soaring. In spite of massive investments in EVs, automakers including Ford are now facing a new problem as well – whereas Ford EV battery costs were previously expected to plunge in the coming years due to an increase in scale and advancements in technology, those same Ford EV battery costs may now rise by as much as 40 percent over the next two years, according to Bloomberg.
“We had a meeting with Korean cell makers recently that led us to adjust the outlook for prices of electric-car batteries,” SNE Research executive vice president James Oh said at a recent seminar. “They say battery prices are highly likely to rise by 2024 or 2025.” The problem, it seems, are rising commodity costs, which are hitting every sector hard, including South Korean EV battery makers LG Energy Solution – which supplies batteries for the Ford Mustang Mach-E and Ford E-Transit – and SK Innovation, which supplies the batteries for the Ford F-150 Lightning.
One year ago, the average lithium-ion battery pack cost between $147 and $153 per kilowatt hour to make, which accounts for around 30-40 percent of the total cost to produce an EV. However, with lithium prices on the rise – a problem that also affects solid-state batteries, which automakers are investing heavily in, including Ford – the cost to produce an EV appears to be headed in the wrong direction. “Sulfide-electrolyte-based solid-state batteries are extremely expensive compared to other types of solid-state batteries and need a lot of lithium,” said LG Energy Solution Vice President Jay Kim. “Prices of sulfide electrolyte could double from last year’s level.”
One of the biggest sticking points preventing consumers from purchasing EVs is cost, something that automakers are working to drive down. In fact, Ford is investing $7 billion alone in its new Blue Oval City complex, which will produce EVs and batteries in conjunction with SK Innovation, which recently spun off its battery division and will open plants in the U.S., as well as Europe and China in the coming years.
We’ll have more on the rising costs of automotive-related commodities soon, so be sure and subscribe to Ford Authority for continuous Ford news coverage.
EVs are a fine strategic goal. Having more transportation options is a good idea. But this “big bang” approach to transitioning the world’s transportation networks in just a few years is just not smart. Environmental hysteria does not help. We are not going to drown from rising sea levels in 10 years. Transitioning to mostly electric with a realistic timeframe of 20 or 30 years is a much better plan. As this article demonstrates, there can be severe problems right out of the gate. Are consumers that are getting crushed by inflation going to spend an extra 50% on a new vehicle when the break-even point versus an ICE is 12 years down the road? The Government and auto manufacturers are screwing this up because they are driving too fast!
So very well put there, David. Couldn’t agree with you more! It’s just like what happened with smoking. Smoking kills, so overnight, no cigarettes allowed. BUT, hey, let’s approve of pot smoking, that’s FINE!
Don’t be hysterical. ICE vehicles will still be around for at least another 50 years. As long as demand is present, manufacturers will build them until they become a niche market, easily killed off by lack of market demand. Ford is making its intents pretty clear in splitting its business into two parts, Ford Blue and Model E divisions. Not only will the Ford Blue division fund advances necessary to the Model E division, its a overt announcement it understands where the public interest is on transitioning to electric vehicles. ICE versions of Mustang, F-150, Bronco and other popular badges aren’t going anywhere, anytime soon. Super Duty (diesel) vehicles will be around even longer. Personally, I think the public demand for EVs will increase faster than most think. I think Ford is smart in hedging its bets. I imagine other manufacturers will follow suit in their own way within a few years.
Those USA Federal officials leading vocal support for rapid ev change, purchase o cean front property and fail to mention the huge expansion of coal burning power plant construction by China.
Yes Obama and Gore must be very good swimmers to take that chance of climate change attacking their homes. Maybe a moat would cost taxpayers less than the secert service being paid to stay there.
The USA can’t be driven by what China does or doesn’t do. China, by the way, is also a leader in alterative energy and transportation design. With its massive population it has to explore all sources of energy.
Japan has already said that they couldn’t charge a all EV market with the grid they have now and would need to produce more power from coal. By time time a 65K EV even gets close to breaking even with overall costs with a midsize ICE 4 door car or SUV, they probably would be both off the road. I rather replace a engine than a battery pack that will cost 20 to 28K now, and who knows how much in the future. Just try to think when the government was good at predicting anything by cost or time. Just look at how in CA the bullet trains did. https://www.hoover.org/research/californias-bullet-train-fiasco-continues-20-billion-120-miles
If this is true, we just added $10,000+ to the cost of an EV.
I think th EV movement is a bubble waiting to burst. Everyone is building battery plants and conditions are ripe for overcapacity right from the start. I would not be surprised to see some of these projects stop dead in their tracks.
You are right on all your points, and they are my thoughts as well. Ford is softening the general public up for continuing price increases of EV vehicles ( instead of price decreases, which some had hope for as production ramps up ). This is a disaster waiting to happen.
We didn’t add it. The market did.
The stupidity of this electric crap is beyond sad!!
There taking up thousands ds of acres of good farm land with solar farms I’m my area. Guess they aren’t smart enough to know you can’t eat electric
In the meantime we should be lowering the speed limits back down to 55 MPH like was done in the 1970’s to save fuel. My best fuel mileage is attained at that speed. We would save lives and burn less fossil fuel besides money. I want no part of an electric vehicle. It should be a choice.
There is zero environmental benefit going to electric vehicles. The extraction of the needed minerals to produce the batteries in China is so poisonous that the environment is permanently destroyed Brown fields where nothing can live, and the workers develop cancer. Then if you add in the needed infrastructure for the additional charging and electricity production, copper production, there is no environmental benefit.
Like every other “transformational” change, it’ll happen slowly as mentioned above. ICE powered vehicles aren’t going anywhere anytime soon. Once supply chain issues slowly correct, then we’ll see how other critical components like battery chemistry, and the supply of those components works it’s way out. It’s going to be awhile.
The government promises the price of EV’s will drop largely yet they keep increasing! Electric motorcycles only grants are in BC and batteries last only 3-5 years costing $1000+ so no savings there. You have to lie to promote the sales of EV’s and that is what governments do sadly
Sometimes technological innovation capacity gets slapped in the face by reality. You can’t build what you can’t make components for. High demand for low supply always equals higher prices.