7% - the increase in average battery prices compared to last year. Experts forecast prices to stay at similar levels next year. Historically, since the inception of this technology, prices have been steadily decreasing. This was especially the case for the period ranging from 2013 to 2021, where the price per kWh went from 732$ to 141$.

So, why are prices taking a turn and increasing?

Since 2021 rising raw material and battery component prices and soaring inflation have led to the first-ever increase in lithium-ion battery pack prices since BloombergNEF (BNEF) began tracking the market in 2010. Evelina Stoikou, an energy storage associate at BNEF, said: “Raw material and component price increases have been the biggest contributors to the higher cell prices observed in 2022. Amidst these price increases for battery metals, large battery manufacturers and automakers have turned to more aggressive strategies to hedge against volatility, including direct investments in mining and refining projects.”

What does this mean for the electric vehicle and the renewable energies sectors?

For the automakers, we can expect a negative impact on their ability to produce and sell mass-market electric vehicles without subsidies or other forms of support. For renewables producers, batteries are also essential. Without them, it is difficult to store surplus electricity in conditions of high solar or wind electricity output. Higher battery prices imply higher total costs of producing renewable electricity which can slow the adoption of these sources in the future. In the coming years, the increasing pressure on rare metals will likely drive their prices up, which is in turn going to reduce the availability of batteries and thus slow the adoption of CO2-free technologies. What can we do to ease these effects? Implementing a circular economy is a good