STORAGE
BATTERY PRICES
Higher Metals Costs to Negatively Impact Margins for OEMs and Global EV Adoption Electric vehicle battery prices will remain high in 2022 as a result of elevated battery metals prices due to increased demand amid the race to electrify the global vehicle fleet. BY FITCH SOLUTIONS
22
Fitch Solutions
A
s battery metals remain one of the largest contributors to the cost of battery manufacturing, higher prices in 2022 will squeeze the profit margins of battery manufacturers and automakers alike as more electric vehicle (EV) models are deployed. Fitch Solutions therefore expects higher input costs to result in upside risks for battery prices in 2022 as long-term agreements with mining firms for the supply of key metals are entered into at substantially higher prices compared to 2020. Over the longer term, developments in the increase of battery recycling will lead to a more favourable battery metals supply outlook as a “closed-loop” metals supply environment offers better pricing mechanisms amid more metals being reused in newer EVs going forward. Fitch currently forecasts global EV sales to rise by 40.3% in 2022 as demand remains elevated amid the need to decarbonise the global vehicle fleet. Asia, Europe and North America will remain dominant markets for EVs over the 2021 to 2030 forecast period (see chart on right). These markets offer a large market to tap into while developing countries continue to lag with the possibility of higher EV prices stunting growth in these markets.
Global: electric vehicle sales, units and EV penetration rate.
