By Brent Wilson, CEO of Galvanic Energy.
America’s electric vehicle (EV) industry seems to have hit a rough patch of pavement in recent months. Lithium prices continue to rise, and no new domestic lithium sources have yet to be established. Even Tesla, despite its substantial efforts to hold the line on affordability, has suffered from the effects of war, supply chain disruptions and the rising costs of raw materials.
The company in March announced multiple price increases including its most affordable electric car, the Model 3 RWD—once touted at $35K—now has an eye-popping price tag of $46,990. Tesla isn’t the only EV manufacturer facing these hurdles.
While they’re still dealing with the microchip shortage, automakers are scanning the horizon for the next weak link that will impact auto pricing.
We’re thinking about what this means for the world of batteries and all sorts of other components that are really mission critical for our company and our capability,” Ford CEO Jim Farley said last year.
Ford made headlines in December when the company stopped accepting customer reservations for its new, highly touted pickup, the all-electric F-150 Lightning. The company shut down orders after reaching 200,000 units, citing a shortage of lithium-ion batteries.
“We’ll get the semiconductors,” Farley said. “The issue [now] is batteries. That’s what we have to solve.”
And Ford isn’t the only one. As the price of EV batteries continues to skyrocket, major automakers ranging from Ford and GM to BMW and Volkswagen are shoring up supply chain strategies. They are forming joint ventures with battery material manufacturers to build factories that will ensure future battery deliveries will be reliable and affordable.
Building a domestic supply chain isn’t just a priority for manufacturers. In March, the Biden administration invoked the Defense Production Act, making $750 million available to the mining industry for expansion and other improvements in the production of lithium.
It’s not just America that is looking to maximize its lithium resources. In April, Mexico’s government nationalized its lithium industry, placing the country’s resources under government control. Chile and Bolivia appear to be heading down the same path, placing rigid restrictions on outside access to the countries’ lithium. Mexico is also pushing for a coalition with Bolivia, Chile and Argentina to create a lithium version of OPEC, which would control more than half of the world’s lithium resources.
With governments and companies placing ever more importance on lithium resources, and global factors pinching the industry from all sides, EV battery prices may continue to climb.
If these recent developments are any indication of what’s to come, the road may only get bumpier, unless affordable, domestic solutions are elevated quickly.
Brent Wilson is CEO of Galvanic Energy, a geoscience-driven resource exploration company. Employing innovative, proprietary discovery methods to identify natural resources essential to the US renewable energy sector, Galvanic Energy develops resource plays that require low environmental footprints and utilize the least invasive extraction processes to provide vertical integration of green technologies toward the development of electric mobilization and energy storage.