Although the popularity of electric vehicles has been very fast, they are still heavier and more expensive than internal combustion engines. Price, in particular, has always been the biggest obstacle to the popularity of electric vehicles. Originally, in the era of industrialization, the larger the output, the lower the cost. But what is puzzling is that the price of electric vehicles has increased more and more recently, what is going on?
Nowadays, any brand attaches great importance to electric vehicles. Electric vehicles have now become an unstoppable trend. Of course, looking at penetration alone, it's hard to see that electric vehicles are still mainstream. As of last year, South Korea had registered 200,000 electric vehicles, but in terms of penetration, it was still only 0.8%. The penetration rate of the Chinese market has reached 20%, which is very leading in the global market.
But the constraints affecting the development of pure electric vehicles seem to be increasing. The first is that subsidies have been reduced. The Chinese market has determined that there will be no pure electric vehicle subsidies next year. If subsidies are reduced, the purchase rate of electric vehicles will inevitably fall sharply. That's because battery manufacturing costs show no signs of falling.
In fact, if you compare the price of an internal combustion engine with an electric car based on the same model, the reality is that an electric car is at least 10 million won more expensive. Although the subsidy is intended to reduce the price to the level of the internal combustion engine, if the subsidy is removed, it may dissuade many people.
Secondly, there is no sign of a decline in battery prices, but the cost of batteries is getting higher and higher. As a result of Russia's invasion of Ukraine, the global nickel price continued to soar, and the price of nickel also soared.
Nickel is one of the materials that make up the cathode materials of current electric vehicle batteries. Especially in recent years, technologies that can increase the speed of charging by increasing the nickel content in lithium-ion batteries have become popular.
However, the price of this nickel has almost doubled in the past three months, and the London Metal Exchange has temporarily suspended nickel trading. This phenomenon also occurs in the United States. The United States suffered a severe shortage last week, with nickel prices rising 67.2% in a single day. So, why is that?
Due to the Russian invasion of Ukraine. First, it turns out that trade sanctions against Russia are the main reason. At present, Russia's nickel supply is about 5% to 6% of the world's demand, which is not very high, but the problem is that Russia accounts for more than 17% of high-purity nickel. The bigger problem, however, is that as postwar uncertainty has increased, trading companies are now refusing to ship some of the raw materials. As a result, there is a shortage of nickel supply.
Of course, many companies, including the Volkswagen Group, are devising a process to develop a technology to extract and recover rare earth elements such as nickel, cobalt and lithium from discarded electric vehicle batteries and use them in new batteries. However, this recycling policy also has limitations. Because the recycling process itself is not free. Although raw materials can be secured stably, supply price deviations are quite large compared to mining, smelting and processing. Simply put, digging is cheaper than recycling.
Although there are alternatives that do not use nickel, such as lithium iron phosphate, the problem is that the energy density of lithium iron phosphate batteries is not high, and eventually this will require larger batteries, but it is not economical. As a result, some automakers may be cautious about raising the price of electric vehicles. If they don't, they will inevitably be in a fatal situation where profits fall.
Of course, internal combustion engines are always questioned by price fluctuations such as rising oil prices. But based on the experience of the past 100 years, the internal combustion engine will not be threatened for a short time. In addition, oil price fluctuations have no direct impact on the rise in automobile prices. Much of this is indirect and will only have an impact on consumer maintenance costs.
However, when the price of raw materials rises, electric vehicles are immediately reflected in the price of electric vehicles. Ultimately affects the user's purchase. This means that there are still many anxieties in the future of travel. Pure electric vehicles may not necessarily surpass internal combustion engine cars in a short period of time.