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Electric vehicle raw material costs doubled during pandemic

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Staff inspect a Rivian R1T electric vehicle (EV) pickup truck on the assembly line at the corporate’s manufacturing facility in Normal, Illinois, US., on Monday, April 11, 2022.

Jamie Kelter Davis | Bloomberg | Getty Images

Raw material costs for electric vehicles greater than doubled in the course of the coronavirus pandemic, in line with a recent report Wednesday by AlixPartners, forcing automakers from General Motors and Tesla to start-ups like Lucid and Rivian to significantly raise prices on recent vehicles.

Average raw material cost for an EV totaled $8,255 per vehicle as of May, up 144% from $3,381 per vehicle in March 2020, led by materials comparable to cobalt, nickel and lithium – all essential for the production of batteries used to power electric cars and trucks. EV-specific costs have increased to $4,500 from roughly $2,000 prior to now two years, in line with AlixPartners.

The fee increases aren’t limited to EVs: Raw material costs for traditional vehicles with internal combustion engines have also roughly doubled during that point period to $3,662 per vehicle, up 106% from a median of $1,779 per vehicle in March 2020. That uptick is being led by increases in steel and aluminum.

The fee spikes come as automakers aggressively launch recent EVs over the following several years. AlixPartners predicts the variety of EV models available on the worldwide market to extend from 80 last yr to greater than 200 by 2024.

In consequence, AlixPartners expects the upper costs to force a relative slowdown in EV launches, as automakers move away from pushing electric vehicles to market as quickly as possible and refocus on profitability.

Ford Motor CFO John Lawler last week said rising commodity costs have worn out the profit it initially expected to make on its electric Mustang Mach-E. While the vehicle was profitable when it was first launched in late 2020, he said that is now not the case.

Within the meantime automakers are raising prices for buyers.

GM on Friday announced it will raise the value of its electric Hummer by $6,250. The automaker blamed higher prices for parts, technology and logistics. Tesla, Rivian, Lucid and others previously announced notable increases within the starting costs of their EVs.

—CNBC’s John Rosevear contributed to this text.

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