Sales of electrified vehicles – full-electric and plug-in hybrids -- doubled globally in 2021 to 6.6 million, but that rapid growth has further stretched supply chains already threatened by the pandemic and Russia’s war in Ukraine, the International Energy Agency said in its annual electric vehicle outlook report.
Essential materials such as lithium, nickel and cobalt are particularly at risk, the IEA said, noting that prices for lithium – an essential component of EV batteries – were seven times higher in May than they were at the start of 2021. Cobalt prices more than doubled, and nickel prices almost doubled.
That surge was a result of "unprecedented" battery demand and "a lack of structural investment in new supply capacity," the report said.
That has had a direct impact on the price of batteries, which make up about one-third of the cost of new EVs. Battery prices fell by 6 percent to $132 per kilowatt in 2021, a slower rate of decline than 2020’s 13 percent, the IEA said.
"Policy makers, industry executives and investors need to be highly vigilant and resourceful in order to reduce the risks of supply disruptions and ensure sustainable supplies of critical minerals," IEA Executive Dirctor Fatih Birol said in a news release.
The agency said that continued high prices for metals could mean an increase of up to 15 percent in battery prices this year – potentially further delaying cost parity between electric cars and internal-combustion engine vehicles, seen as a key tipping point in EV adoption.