USA: Fall in lithium prices making EVs more affordable

The average price of electric vehicles in the United States of America dropped by $1000 in February

According to media reports, Lithium - one of the most common ingredients in almost every electric car battery, has been witnessing a drop in prices. This, in turn, has allowed EVs to become more affordable.

Reports state that since January, prices for Lithium have dropped by nearly 20 per cent. This along with the price drop of Cobalt & Copper, other materials used in producing batteries, has made it easier for carmakers to cut down prices of their electric vehicle offerings. Tesla has cut down prices by thousands of dollars across its entire model range, including its two most expensive cars, the Model S and Model X. Apart from Tesla, Ford has also cut down prices of its EV offering, the Mustang Mach-E.

As per the Kelly Blue Book, the average price of electric vehicles in the United States of America dropped by $1000 in February, when compared to the previous month of January 2023. Also, Kang Sun, Chief Executive of Amprius Technology, a young battery maker stated that the major roadblock for EVs is its cost, hence the falling prices of lithium, which should help promote EV sales. He also added that prices of lithium could fall further as demand for the metal hasn't risen as fast as the industry expected.

While the exact reason for the price drop is not clear, experts in the industry have varied opinions. While some attribute it to short-term factors like the slowing sales in Europe and China after the subsidies on EV purchases expired. Others believe that new mines and processing plants were solving the lithium problem sooner than earlier predicted.

There are also some like Ryan Melsert, the Chief executive of American Battery Technology and Vivek Chidambaram, Senior Managing Director for Strategy at Accenture; both of whom believe that the recent decline in lithium prices is temporary. Ryan Melsert attributes the decline to temporary factors like a seasonal slowdown in EV sales in China. Vivek Chidambaram, on the other hand, states that the decline is due to EV sales, which although brisk, aren't growing as fast as automakers expected. This has led to suppliers producing more lithium needed. Chidambaram expects prices of lithium to fluctuate for the next several years.

Source: NYTimes

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