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Battery costs could stop falling starting in 2020 due to demand for electric cars, says Hyundai

Battery costs have been falling fast for years now, but commodity prices of several key raw materials have been increasing recently and some predict that the supply won’t be able to keep up with the demand.

Now Hyundai, which is currently trying to build its battery supply chain for upcoming electric vehicles, predicts that battery costs could stop falling starting in 2020.

Lee Ki-sang, SVP of green vehicles at Hyundai Motor, told reporters (via Reuters):

“Not a single ingredient is going in a positive direction in terms of pricing. So far battery prices have been declining at a rapid pace, but the pace will moderate significantly or maintain the status quo by 2020.”

Hyundai’s current electric vehicle effort is limited to the Ioniq Electric, which is currently produced in relatively low volume with a small 28 kWh battery pack, but they plan to significantly expand their lineup of EVs with longer range options over the next decade.

LG Chem is making the battery cells for the Ioniq.

Ki-sang is afraid that the current trends of increasing prices for minerals like lithium and cobalt are going to continue as demand for batteries increases with demand for EVs and that at some point around 2020, it will catch up with improvement in overall battery costs.

In anticipation, Hyundai is working on its own battery production and on new battery technology, like solid-state batteries.

Electrek’s Take

Personally, I think that’s a very tough prediction to make because current battery costs are affected by much more than raw material costs – evidently, since the cost of batteries keep decreasing despite the costs of the minerals increasing.

To assume that other improvements related to the chemistry and manufacturing of the cells will slow down enough around 2020 that raw material costs will catch up is just a big assumption.

Furthermore, while prices of lithium and cobalt keep increasing, there’s a lot of new mines and processing plants under development right now. As more people start to believe in the electric revolution, more investments will flow to those projects and more supply will come to the market to support the demand.

We posted an article earlier this year about how to invest in this resource boom.

Also, while there’s no doubt that demand for batteries is outpacing the current production of cobalt and lithium and that major production increases are going to be required, there’s so little of those metals per battery cell that any price increase represents only a small price increase for a battery pack.

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