Tata Motors’ announcement follows that of Daimler’s, and it shows us the car industry is once again facing a lot of problems.First, it was the semiconductor chip issue. Next, supply chains turned into a hassle, and now raw materials for making EV cells are starting to have monthly hikes in costs. Things are not looking good for buyers..
Shailesh Chandra, managing director of the passenger vehicles and electric mobility subsidiaries at Tata Motors, confirmed for Reuters that batteries are facing their own kind of inflation. This is not about money-losing purchasing power, but it shows the competition for energy storage is heating up by the minute. Who wants cells and cars to sell has to pay - a lot more.
But now it’s turning out to be worse than anticipated. The executive says a total raise of 20% in cell cost will most likely happen in April. This trend will continue for at least a year, as the availability of raw materials is starting to become a major problem for the industry. Undoubtedly, this will be reflected in EV pricing. Customers will face more problems in making the decision to go for zero-emissions cars.
A battery cell is the basic unit of a lithium-ion (Li-Ion) battery. This component exerts electric energy by moving electrons around. Charging and discharging are possible with the help of a cathode, anode, a separator, and an electrolyte. All these parts are made from lithium, nickel, cobalt, and copper. Just the price of the material from which lithium is being extracted and processed ha increased sevenfold in the last twelve months. Now nickel is following the same path.
Given that most of us are buying EVs because they’re subsidized by governments, these incentives will slowly start to fade as the prices keep climbing. And this is not a scenario that might happen. It already took place.
The issue at hand is that it will happen again. We will have to pay more for the EVs we want while gas prices continue their uptrend and make internal combustion engine cars unattractive. We'll be faced with a dilemma soon enough.
Besides being very realistic, Chandra thinks this climate won’t hold for long. He’s confident we’ll start seeing some corrections starting from next year. The man also hopes recycling will start to play a key role in making batteries cheaper.
Tata Motors has raised its prices in India by just 2%, but it will be forced to add more soon enough. That may also be a reason why the new Range Rover plug-in hybrid is being delayed and why Daimler is looking with hope toward hydrogen.