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EV Batteries

Surging battery material costs put roadblock to EV growth

Lithium prices nearly double, cobalt costs jump 63% so far this year

By Jul 28, 2021 (Gmt+09:00)

Charging an electric vehicle.
Charging an electric vehicle.

Prices of core raw materials such as lithium and cobalt for electric vehicle (EV) batteries jumped to threaten the global auto industry’s key future growth engine. Supply of those materials has not been able to meet demand on the global EV market’s rapid growth.

Raw materials such as lithium and cobalt usually account for 30-45% of battery costs, while batteries make up 30-40% of EV prices. Surging raw material prices tend to put upward pressure on EV prices. That could prevent global carmakers and battery producers from keeping their pledges to launch ‘half-price’ batteries and EVs.


Global lithium prices have surged 91.4% so far this year as of July 23 and cobalt prices have jumped 63.1%, according to Trading Economics. Copper and aluminum prices also increased 26.8% and 26.6% during the period, respectively.

That drove prices of metals for battery cells. Costs for six key metals such as lithium and cobalt for a 64-kWh battery cell (NCM811) increased 52.3% to 2.3 million won ($199.9) this year. That came as global demand for EV surged. EV sales in the world soared 144% to 592,400 units last month, according to data from EV-volumes. Their sales are expected to reach 6.1 million units in 2021, 1.87 times more than last year, EV-volumes predicted.

Surging raw material costs could push up prices of EVs, which had enjoyed battery price declines on economics of scale, stemmed from expansion of production lines.

“Ever-cheaper batteries over the past decade have made electric vehicles more price-competitive. But rising demand for EVs could now disrupt that trend,” the Wall Street Journal said.

The fast-growing EV demand is forecast to result in battery supply shortages. According to a Bank of America Global Research report, the global EV battery supply is in danger of running out from 2025. The shortages are predicted to intensify from 2026 to 2030, the report said.


The soaring raw material costs already hit profitability of global carmakers. Hyundai Motor Co. prepared measures to deal with the surge since it could hurt earnings in the second half, said Seo Gang-hyun, its Executive Vice President of finance and accounting, when the company announced the second-quarter earnings. Operating profits of six Japanese automakers including Toyota Motor Corp. are expected to fall by a combined some 1 trillion yen ($9.1 billion), about 30% of total operating profits, this year due to rising raw material costs, according to the Nihon Keizai Shimbun (Nikkei).

The auto and battery industries rush to secure raw materials. They are going for broke to reduce dependence on China, which dominates the global raw material markets. Last week, Tesla Inc. signed a nickel purchase deal with a global miner BHP Group, its third agreement in the last eight months. LG Energy Solutions bought a 7.5% stake in an Australian battery materials supplier Queensland Pacific Metals (QPM) for 12 billion won and inked a ten-year purchase deal. SK Innovation Co. decided to buy 30,000 tons of cobalt from Glencore Plc. until 2025.

Car makers are developing technology to reduce Chinese rare earth used for permanent magnets that power EVs. Nissan Motor Co. and Tesla are working on batteries which do not use cobalt.

Battery producers and automakers are also actively cooperating – Toyota and Panasonic Corp., Volkswagen and Northvolt, General Motors Co. (GM) and LG Energy Solution, as well as Ford Motor Co. and SK Innovation.

Hyundai Motor is developing solid-state battery technology in a move to secure its own next-generation battery technology in a longer term. It also seeks battery lease and reuse business to help customers reduce EV purchasing costs. In February, it signed a memorandum of understanding (MOU) to work on the business with South Korea’s government as well as logistics, battery and mobility companies.

Write to Il-Gue Kim and Hyung-Kyu Kim at

Jongwoo Cheon editied this article.
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