In early 2020, before Covid-19 hit and Russia hadn’t attacked Ukraine, makers of electric vehicles (EVs) were optimistic that prices of batteries will come down and reach cost parity of with combustion engine cars by 2025. Today, no one believes in that message anymore.

In the near-term, prices of EVs will go up, not down. Consulting firm AlixPartners say that between 2020 to 2022, the cost of raw materials to build an EV has gone up by 144 percent.

Yes, inflationary pressure, higher energy cost, and shortage in semiconductor parts are also driving up the cost of regular combustion engine cars but the problem is the increase for EVs is a lot more than combustion engine cars – 144 percent versus 106 percent, according to AlixPartners.

The reason? Before a battery can be made, somebody must mine, refine and process the minerals, and there just isn’t enough mines to meet every manufacturer’s / green agenda-focused governments’ lofty projections.

Prices of cobalt, nickel, lithium are all going up. Battery recycling sounds great in theory, but it’s not viable in the real-world because it’s very expensive (and difficult) to separate the minerals from inside a waste battery.

At last month’s launch of the Kia EV6 in Malaysia, a Korean executive overseeing Kia’s regional operations in Asia Pacific told WapCar.my that the RM 301k price for the EV6 GT-Line is unrealistically low and is not sustainable (kudos to the folks at Dinamikjaya for getting the Koreans to agree to the price).

The average car buyer might find this hard to believe but the Kia EV6 costs a lot more than the RM 301k it is sold for in Malaysia. Note that this is a tax-free price. Between now until 31-December 2023, battery EVs are exempted from paying import and excise duty, as well as road tax.

Local distributor Dinamikjaya Motors have also confirmed that the company is not making any money on the car, but it is introducing it anyway as part of its commitment to the Kia brand, and to support Malaysia’s wider push towards electric mobility.

Also read: Kia EV6 launched in Malaysia - Priced from RM 301k, 325 PS, AWD, 506 km, full ADAS

Elsewhere, EV leader Tesla has already raised prices of its models by more than 20 percent. By June 2022, prices of Tesla models sold in the US are up by more than 10 percent, from January 2022. Over in China, prices of Model S and Model Y have already been raised twice this year.

Likewise for the Ford Mustang Mach E.

Euro-American car empire Stellantis have warned that if prices of EVs continue to spiral out of control, and the European Union proceeds with its goal of banning combustion engine cars, the market could collapse.

Stellantis’ manufacturing boss Arnaud Deboeuf said in June, "If EVs don't get cheaper, the market will collapse."

"While Stellantis will comply with the decision, policymakers appear to not care whether automakers have enough raw materials to underpin the shift," said CEO Carlos Tavares on the bottle neck limiting Stellantis’ EV ramp up to comply with Europe’s Fit For 55 CO2 reduction targets.

On top of the increase in cost, distributors in Malaysia also have to contend with a significantly weaker Ringgit, which has fallen past RM 4.45 against the US Dollar.

At the moment, no EV player in Malaysia has said anything about increasing prices of their EV models, but that’s also because most of these models (with the exception of MINI Electric) have only been on the market for less than 12 months.

Expect some price adjustments starting 2024.