Electric vehicle raw material costs have doubled during the pandemic

Workers inspect a Rivian R1T electric vehicle (EV) pickup truck on the assembly line at the company’s manufacturing facility in Normal, Illinois, U.S., Monday, April 11, 2022.

Jamie Kelter Davis | Bloomberg | Getty Images

Raw material costs for electric vehicles have more than doubled during the coronavirus pandemic, according to a new report released Wednesday by AlixPartners, forcing automakers from General Motors and Tesla to start-ups like Lucid and Rivian to significantly raise costs. new vehicle prices.

The average raw material cost for an electric vehicle was $8,255 per vehicle in May, up 144% from $3,381 per vehicle in March 2020, driven by materials such as cobalt, nickel and lithium – all essential to the production of batteries used to power electric cars and trucks. According to AlixPartners, costs specific to electric vehicles have increased from about $2,000 to $4,500 over the past two years.

Cost increases are not limited to electric vehicles: raw material costs for traditional vehicles with internal combustion engines also more than doubled during this period to $3,662 per vehicle, up 106% compared to an average of $1,779 per vehicle in March 2020. The rise was led by increases in steel and aluminum.

The cost spikes come as automakers aggressively roll out new electric vehicles over the next few years. AlixPartners predicts that the number of electric vehicle models available on the global market will increase from 80 last year to more than 200 by 2024.

As a result, AlixPartners expects rising costs to lead to a relative slowdown in EV launches as automakers move away from bringing EVs to market as quickly as possible and refocus on profitability.

Ford Motor Chief Financial Officer John Lawler said last week that rising raw material costs had wiped out the profits originally forecast for its electric Mustang Mach-E. While the vehicle was profitable when it launched in late 2020, he said that is no longer the case.

In the meantime, automakers are raising prices for buyers.

GM announced on Friday that it will raise the price of its electric Hummer by $6,250. The automaker blamed higher prices for parts, technology and logistics. Tesla, Rivian, Lucid and others have previously announced notable increases in start-up costs for their electric vehicles.

—CNBC John Rosevear contributed to this article.

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