According to BloombergNEF, battery prices rose for the first time in a decade. However, BloombergNEF experts don’t expect the rising costs for battery ingredients like lithium, cobalt, and nickel to impact vehicle prices anytime soon. Moreover, they expect it to be a temporary bump as BNEF predicts prices will drop in 2024, as more lithium production comes online. 

Still, it’s not good news for both legacy automakers as well as EV start-ups that desperately need profits from EVs to come as soon as possible to offset intense capital costs.

With rising costs and global pressures, automakers are trying to localize production and secure an in-house battery supply. Therefore, automakers seem to be taking another page from Tesla’s playbook despite the EV pioneer not doing so well in face of its share price dropping 61 percent since the beginning of the year, underperforming Ford and GM.

Forgetting everything they know

Automakers have been trying to evade the electric trend by exploring different kinds of batteries, ramping up battery recycling efforts and working to return lithium, nickel and cobalt into the supply chain. But, the existing knowledge does not help much in this equation as a new electric world comes with a new set of rules that is forcing automakers to vertically integrate and get more control of their supply chain.

Global supply chain is now a weakness

Historically, a global supply chain with a variety of players has reduced the risk pf potential bottlenecks. But natural disasters and most recently, the COVID-19 pandemic, revealed that such constitution makes automakers extremely vulnerable as even minor disruptions ended up halting the manufacturing line for days or even weeks.

Bringing manufacturing closer to home

This year, we’ve witnessed an unprecedented amount of joint development agreements, early supply contracts and similar announcements. These kind of agreements are always complex and significant time is needed for them to bear fruits but they seem to be the best way to make EVs more affordable.

Even the legendary automakers cannot pull it off alone. GM made a multimillion investment into Australia’s Controlled Thermal Resources (CTR) to extract lithium from California. Back in July, Ford Motor revealed it will buy lithium from Ioneer Ltd’s (INR.AX) Rhyolite Ridge mining project in Nevada.

Worksport

Worksport Ltd. WKSP is a company commited to changing the rules of the game both in the energy and automotive industry. With solar powered tonneau covers among its many intellectual properties, its subsidiary Terravis Energy Inc is developing a Non-Parasitic Electric Vehicle (NPEVTM) charging platform. Moreover, to minimize geopolitical risks that are very much in the air these days, the company added a manufacturing facility in the U.S. The 222,000-square-foot facility is expected to be up and running at full capacity soon.

Mercedes Benz

Automakers are also investing heavily into battery development in an effort to reduce their dependence on lithium and other highly prices and demanded battery ingredients.

On Wednesday, Mercedes-Benz unveiled its over $1.06 billion plan to adapt its entire global production network for electric powertrain systems from 2024.

With plants in Germany, Beijing and Romania, the premium automaker has set up its lines to produce both traditional combustion engines and EVs, but assembling batteries and motors on the same line is a  more challenging task. The automaker stated that many of its component-making plants will continue making parts for internal combustion cars, as long as there is demand. Therefore, the automaker is striving for all-electric sales by the end of the decade but where the market conditions allow for it.

Tesla’s flamboyant CEO is feared to be distracted

Although no one can argue that Tesla is the company who started all this EV frenzy, concerns are in the air as its CEO, Elon Musk, has sold another round of stock valued at $3.6 billion. What is worrying is that Musk stated in April that there would be “no further TSLA sales” to support his acquisition of Twitter acquisition. Since the takeover, thebillionaire has sold $23 billion of Tesla stock and is found by many to be distracted and even absent. Although Musk tried to address concerns on Tuesday, stating that he will make sure that Tesla shareholders benefit from Twitter long-term, this proclamation was overshadowed by the controversy surrounding the management of the never-boring social network. Tesla did an extraordinary job but as we all know too well, future is promised to no one, and therefore, taking pages from its book in this ever changing climate is not necessarily a good idea.