Lithium Price Soars 500% As Demand For EV Batteries Skyrockets

According to a recent report by British research firm Argus Media, the price of lithium, a rare metal required in the construction of rechargeable batteries, has soared fivefold since April 2021 as demand from automakers rose, Mainichi Japan reported.

Photo Insert: The rise in demand, combined with Russia's invasion of Ukraine, has disrupted lithium supply chains.

Other metals needed in batteries, such as cobalt and nickel, have also risen in price, accounting for around 30 to 40% of the overall cost of electric vehicles, the firm said, Kyodo News also reported.

The rise in demand, combined with Russia's invasion of Ukraine, which has disrupted lithium supply chains, will certainly drive up EV prices, making the already pricey cars much more so for consumers, perhaps stalling the transition away from fossil fuel vehicles.

According to Argus Media, the price of lithium dropped from over 89,000 yuan ($13,200) per ton in April of last year to 486,000 yuan per ton in April of this year. In the same time span, cobalt prices surged 1.8 times and nickel prices increased 1.5 times.

The price of nickel increased more quickly after Russia, a major producer of the metal, invaded Ukraine, raising supply concerns. In the United States, Tesla Inc. raised prices across its entire product line earlier this year in order to pass on higher raw material costs to customers.

Automakers are accelerating electrification in the face of global efforts to reduce carbon emissions, raising the prospect of further increases in demand for such key commodities and their prices.

Toyota Motor Corp. stated in December that it aims to sell 3.5 million EVs globally by 2030. Honda Motor Co. wants to sell 2 million EVs per year by 2030, while Nissan Motor Co. wants EVs to account for 50% of total sales by the same year. Volkswagen AG, meanwhile, has announced plans to build multiple battery manufacturing plants in Europe.

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