20% hike in cell costs raising pressure: Tata
NEW DELHI: The cost of battery cells had increased by around 20% because of a global surge in raw material prices, mainly lithium, putting pressure on the company in the short-term, said Tata Motors, India’s top-selling electric carmaker.
Cell prices have been rising over months, according to Shailesh Chandra, managing director of the passenger vehicles and electric mobility subsidiaries. Chandra expects them to remain high for about a year.
“The immediate impact seems to be about a 20% increase, which will have short-term pressure. This should moderate within a year and then start coming down,” he said.
Chandra did not say whether this would affect the company’s sales or profitability but contended that demand for “green personal mobility” was rising sharply. The Tata Motors official expected to offset some of the costs by increasing the use of locally sourced components in its cars, he said.
Automakers globally are facing inflationary pressures because of surging costs of nickel, cobalt and lithium that are used in making batteries, the most expensive part of an electric vehicle (EV), as demand outstrips supply.
This has been made worse by Russia’s invasion of Ukraine and analysts said it threatens to slow the trend of falling battery prices, which could hamper the broader adoption of EVs, especially in price-sensitive markets such as India.
High battery prices and an insufficient charging network are the main reasons why there are few takers and why more carmakers are yet to launch electric models.
Spot prices for lithium carbonate, typically used to make lithium-ion batteries, surged to more than $70,000 per tonne in March 2022 from about $10,000 a year earlier, according to data from industry forecaster Benchmark Market Intelligence.
“This inflationary impact is expected to continue,” said Manish Dua, senior analyst at Benchmark.
Tata recently raised the price of its Nexon electric SUV in India by more than $300, a 2% rise for the base model..