The energy transition comes at a price, and that price is likely to be even higher in the years ahead. According to the analysis, battery prices, which were originally falling due to increased production of electric vehicles, could rise by 22% between 2023 and 2026, reaching as high as $138 per kilowatt-hour. The change in trend is due to the growing demand for raw materials such as lithium and cobalt, which are essential in the battery manufacturing process.
Currently, the average price of batteries hovers around $128 per kilowatt-hour and could drop to $110 per kilowatt-hour next year, according to a report by a U.S. research institute. However, in the last 18 months, the price of lithium has risen by nearly 900%. Consequently, battery costs are also expected to increase. The ensuing scenario is that electric cars sold in 2026 will likely increase in price by $1,500 to $3,000 each. In turn, a price increase of this magnitude would reduce EV sales by 5% to 10% in 2026.
According to the data, electric car makers are planning to launch new models in the market due to the popularity of electric vehicles. In the U.S. alone, annual EV sales are expected to exceed 2 million. In view of this, there are more and more voices in the industry reminding the need to ensure the supply of raw materials such as lithium and cobalt.
Latin America has huge lithium reserves and is emerging as a strategic force in the industry.
It is understood that 56% of the world's lithium reserves are concentrated in Chile, Argentina and Bolivia, and the region is becoming a pioneer in the market. The price of battery-grade lithium carbonate has risen sharply over the past year, from $9,000 a ton to $75,000.
Although countries are generally interested in developing lithium resources, there are differences in mining patterns. Bolivia and Mexico see lithium as a public utility mineral that must be developed by the state, while Chile and Argentina allow private sector participation.
The recently established Latin American Lithium Chamber of Commerce is also playing an active role. The agency, which already has representatives from Argentina, Chile and Peru, aims to dominate pricing and drive the lithium market.
