Commodity Costs Push Electric Vehicle Prices Higher
Rising Raw Material Costs for Batteries
The makers of all-electric vehicles, from General Motors to Tesla, are raising the prices on electric vehicles due to rising commodity costs, specifically for key materials used in battery packs, though other costs are surging as well. As the number of all-electric vehicles grow to meet the 2030 switch over to EVs and away from gasoline-powered cars, the demand for lithium-ion batteries and the minerals that compose them could push the price of EV batteries up by more than 20 percent. That’s on top of the current supply-chain disruptions due to the Covid pandemic and Russia’s invasion of Ukraine.
Surging Costs for Manufacturers
Tesla has raised prices on its cars twice in March after seeing significant recent inflation pressure in raw material costs. The least expensive version of the Model 3, for instance, is up 23%, now starting at $46,990. Startup company Rivian raised the prices on its R1T electric truck by 18% to $79,500 and 21% to $84,500 on its R1S SUV model. Rivian CEO RJ Scaringe says the company will honor the old prices for orders already placed. According to Scaringe, “Since originally setting our pricing structure, and most especially in recent months, a lot has changed. Everything from semiconductors to sheet metal to seats has become more expensive.”
Lucid Group recently said that it will raise prices on all but one version of its Air luxury sedan by about 10% for U.S. customers who place orders on or after June 1. Lucid CEO Peter Rawlinson assured consumers that Lucid will honor current prices for any reservations placed through the end of May. “The world has changed dramatically from the time we first announced Lucid Air back in September 2020,” Rawlinson told investors during the company’s earnings call.
Even established global automakers such as General Motors is being hard hit by rising commodity prices. GM has raised the starting price on its new Cadillac Lyriq crossover by $3,000 to $62,990. This increase excludes sales of the initial debut version of the vehicle. Meanwhile, Ford Motor Company though struggling with what it calls “insane” commodity costs, is holding the line with its sold out Ford F150 Lightning all-electric pickup truck with a starting price of just $39,974. Though Ford will have to react to rising commodities, the 200,000 existing reservations for the Lightning will be spared a price hike.
With well-established supply chains on vehicles already in production, General Motors has been able to keep their price hikes modest. For instance, the Chevy Bolt Currently starts at $31,500, up $500 from earlier in the model year, but down $5,000 compared with previous model year.
Nissan has been selling its Leaf EV since 2010 and has well-established supply for materials as well. It plans to maintain starting prices for the vehicle in 2023. Nissan America chairperson Jeremie Papin has said that the company’s priority around pricing is to absorb as much of the external price increases as possible. “That’s always the first priority,” Papin told news outlets recently. “That’s what we’re focused on doing … it’s true for ICE as it is for EVs. We just want to sell cars at a competitive price and for their full value.”