Dropping prices for electric-vehicle components this winter have helped shrink manufacturer costs, bucking forecasted stability of high model prices, the New York Times reported.
It said the price of EV battery element lithium has fallen almost 20% since the new year, cobalt by more than half, and copper, a key EV battery and motor component, by about 18%.
The pattern goes against analysts' expectation that prices would stay elevated or continue climbing and has made it easier for carmakers, including EV market leader Tesla, to cut prices. Tesla has made a couple of rounds of price cuts since January, prompting legacy automakers, such as Ford, to follow suit in competition for a growing EV consumer market.
Just in December, BloombergNEF reported that EV battery prices were up for the first time since it started tracking the segment in 2010. Before, they had fallen each year as production rose, but inflation and rising raw material and battery component prices caused the recent increase in lithium-ion battery pack prices. It predicted at the time that battery prices would start falling again in 2024.
The decrease has apparently happened sooner, according to the New York Times report. It said lithium demand hasn’t increased as much as some industry watchers had anticipated.
Analysts differ on whether the recent price drop will be sustained. Some think it temporary due to falling EV sales growth in China and Europe due to expired purchase subsidies, the newspaper report said. Others say new mines and element-processing capacity should make it longer-term.