The cost of raw materials used for electric vehicles more than doubled during the pandemic, with the price of cobalt, lithium, and nickel — all materials used for EV batteries — surging 144 percent since 2020. That uptick is being directly translated to price hikes for consumers. Stacy Noblet, an EV Expert and vice president, Transportation Electrification at ICF joined Cheddar's Opening Bell to discuss how the supply problems coupled with demand have led to the sticker shock. "You kind of have a perfect storm for better or for worse. Even before the pandemic, the interest in electric vehicles was rising significantly with new models coming online," she said.

Opening Bell

EV Makers Hike Prices Amid Skyrocketing Raw Material Costs, Rising Demand

for more on this. We're speaking with Stacey Novelette E. V. Expert and vice president of transportation electrification. Thanks so much for joining us. Can you break down exactly what's going on here? Why are these prices so high? And is there any relief in sight for consumers? Thank you Asia. Great to talk with you. You kind of have a perfect storm for better or for worse. Even before the pandemic, the interest in electric vehicles was rising significantly with new models coming online, A lot of attention being paid to the savings. When you look at the total cost of ownership, we've got not only the consumer market but also the fleet market really interested in electric vehicles. Um, and you know, the pandemic hits, people have a lot more time to, to do their research and um, really understanding what the options are. And so the increase in interest in electric vehicles, combined with chip shortage and raw materials, just having um, you know, a harder time moving around ultimately as we're seeing with the supply chain more broadly. And so what that's creating is, is ultimately, uh, you know, a significant problem with the supply of electric vehicles while everyone wants them. Um, and so, you know, to draw down on already a limited supply with this great interest is just making it harder for consumers to find the vehicles they want to get them in a time frame. That makes sense, whether it's for, you know, a driver like myself or a fleet that really needs to replace vehicles on a regular basis. And so it's kind of all coming together, um, but we we are seeing, you know, a lot more product offerings being announced by automakers and ramping up in production capacity overall. So hopefully this is a short term problem in the end. Okay. It sounds like that would be very hopeful. This is something that even Tesla's co founder had warned about before. The geopolitical tensions that we've seen in Russia and Ukraine also impacting supply chains globally. Um, but I want to ask you, obviously a lot of these automakers are passing on the increased cost of these materials to consumers by hiking the cost of these cars. You mentioned this being potentially short term. When do you think we could see this ease? Because the increases are astronomical. I mean 144% that adds about, I think it's somewhere around the price tag of like $8500, if I'm correct. So it's a really incremental um, and noticeable increase even for those who are willing to pay for these vehicles. Yeah, it's certainly significant. And you know, we see those who have put in orders, many of these vehicles are not necessarily available to drive off the lot. And so consumers are placing orders ahead of time and then hearing from the manufacturers that there's an increase along the way, which certainly isn't, you know, a great thing from a customer service and customer satisfaction perspective. So I certainly understand the frustration from the consumers, but I think that most drivers understand, you know, they're willing to wait and even with, with some increase the cost of ownership for an electric vehicle compared to a gasoline vehicle, internal combustion engine vehicle, you know, the upfront cost maybe maybe more significant, but you're saving a lot over the life of the vehicle by fuel, um, by, you know, zero to little to no maintenance costs. And so that does pencil out for most consumers when they take a look at it, if they have the ability to, like you said, to pay that upfront cost, which isn't the case overall. And so we're seeing more attention on the pre owned market and how to make make vehicles more, you know, just accessible to the greater public. Yeah, absolutely. As someone coming to from southern California, I joke about this all the time, but I'm serious when I say going to the gas pump is heart wrenching situation at this point. You just don't even want to look at the final receipt. Uh, so I definitely think people are willing to pay these prices. But I'm also just curious something that comes to mind is the fact that so many of these electric vehicles are on waitlist for months at a time. So our customer is going to be able to secure a price, you know, say early on in case there are other pressures on the supply chain or on these raw materials? How do you think these automakers are going to tackle that? Is it gonna be kind of like the stock market and we're going to see fluctuations in prices in real time. Yeah, it's an interesting issue and something that, you know, automakers really haven't grappled with in the past to this extent, I think each is probably approaching it in a slightly different way. You know, I have colleagues and friends who have been on wait lists are willing to to stay on those wait lists for really, as long as it takes. You know, they're committed to to get in that vehicle eventually on the same hand, same same breath. We have other people who are kind of waiting it out to see what happens to see how prices shake out. But also just the availability of different vehicles. You know, we're seeing different models being announced that may fit a person's lifestyle better than than what is available today. Um, so, you know, I think everyone individually needs to make a decision for themselves. And you know, I think automakers are trying to be as transparent as possible with the folks that have, um, pre owned pre order. Excuse me. The vehicles to say, look, here's where we're at here is where you're at in the the timeline as well as, you know, any cost increase. You know, there's been some pushback from customers that have kind of locked in prices or at least have, you know, the illusion that they're locking in prices and that changes. So each automaker does need to deal with, you know, their their customers individually. But again, the value proposition for an E. V. Owner overall is really quite attractive. Yeah. And I'm glad that you mentioned that each automaker and the way that they communicate with their customer base is very different. And even just the interest I think in each of these specific vehicles and designs. So I'm wondering, what are you seeing in terms of that push back from customers? Are you seeing that people are leaving these wait lists or for going? Um This process because of the increase in costs. Are people holding on because to your point, it's easier to pay this cost up front in the long run than to pay these gas prices right now. Yeah, it's a great question. I actually haven't kind of reevaluated since gas prices hit the $5 mark. But I would I would imagine that that um customers are more likely to to stay on those wait lists and wait it out. You know, recognizing that we may be in this high gas price situation for a while. Um but whether that comes down or hang steady. Um It's still a good, good move in the in the long run to pencil out with these vehicles, not to mention, you know, if for the resale value of electric vehicles are hold is holding pretty steady. Um So I think, you know, again, for the long play, most, most customers are hanging in. We did see a situation when, when Rivian announced to their, you know, sort of pre order customers that they were increasing the price and then kind of walk that back again. You know, it's it's going to be a very individual decision for the automaker based on their customers, you know, based on how they marketed it. Um any, you know, caveats that they've kind of put out there um in advance, but as long as they're being, I think transparent with customers, you know, certainly there, they'll appreciate having having a heads up if they need to make a decision and having enough time to make that decision whether they pull out or or stick with it. Yeah, Stacy. I could talk with you all day about this to be honest, but I think I have about a minute left, I just want to ask one more question. How do you think this changes the future when it comes to mainstream adoption of electric vehicles and also just clean energy and sustainability generally. Yeah, I'm very optimistic. You know, we I c f my company did a report through our Climate Center recently that showed, you know, to reach the net zero goals that the United States has um electric vehicles are a very promising part of that solution, but not the only one, the power sector needs to increase renewables too to ultimately fuel those vehicles in the end. But there are policies in place that are getting us there. This great attention from the consumer and fleet market to electric vehicles is really exciting and it's not waning in many ways. It's increasing throughout all of these challenges. And so there's a lot of really great activity happening not only on the vehicle side, but also on the charging infrastructure side, partnerships again, policy, the funding that's coming from the federal government as well as private industry, the leadership that we're seeing from state and local governments, it's all continuing to push this market forward and I'm certainly optimistic that will continue to see the record electric vehicle sales that we have in the last year or so at this point. Well, really appreciate your perspective. Thanks so much for joining us that Stacy. No black tv expert and vice president of transportation electrification.