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As the demand for electric vehicles (EVs) increases, it is important to keep in mind how this impacts the supply chain – especially as it relates to the cost of lithium batteries.
The increased demand for lithium across multiple sectors, has caused a significant increase in lithium prices.
In a tweet last year, Tesla’s CEO, Elon Musk, commented that lithium prices have reached “insane levels.“
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“Price of lithium has gone to insane levels! Tesla might actually have to get into the mining & refining directly at scale, unless costs improve. There is no shortage of the element itself, as lithium is almost everywhere on Earth, but pace of extraction/refinement is slow.” – Elon Musk
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This increase affects the price of EV batteries, with recent estimates ranging from $2,500 to $20,000, depending on the car model.
According to a report by the McKinsey & Company Battery Insights team, the demand for lithium batteries is expected to increase 30 percent annually.
How this affects pricing remains to be seen as companies work to resolve global supply and manufacturing issues.
We’ll explore additional issues affecting the EV manufacturing process in future posts.
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