Electric vehicle prices may rise in 2022. Here's why

Electric vehicles are getting more affordable with passing time, a key factor in ensuring that adoption for the newer technology gains pace. And while government subsidies and mass production are some of the key factors making such vehicles more popular, the falling price of batteries are also helping. But the fall in prices may not last for too long.

In its annual battery report, BloombergNEF recognized that average price per kWh fell to $132 from $140 last year and from a mammoth $1,200 in 2010. For EVs in particular, batteries - on an average - cost around $118 per kWh.

But hold on to the celebrations.

Rising prices of lithium and higher raw material costs in recent times are possible indications that batteries may become more expnesive in the upcoming year. And because battery cost is a key part of how an EV is priced, the prices of such vehicles may see an upward trajectory as well. “Although battery prices fell overall across 2021, in the second half of the year prices have been rising," said James Frith, lead author of the BNED report. “This creates a tough environment for automakers, particularly those in Europe, which have to increase EV sales in order to meet average fleet emissions standards."

How auto brands decide to deal with the developing situation remains to be seen. Either brands would opt to absorb the price increase which means a cut in profit margins or pass it on to customers. This second bit always carries the risk of swaying such customers away from a battery-powered option.

A significant number of brands - from Tesla, Mercedes, Volkswagen to Renault, Toyota, Hyundai, GM and Nissan - have made their electric ambitions amply clear. But cutting across EV segments, many believe price - apart from range - remains a sensitive topic on the minds of potential and prospective buyers.