Why an Electric Car Battery Is So Expensive, For Now

At Tesla Inc.’s ballyhooed Battery Day event in 2020, CEO Elon Musk set himself an ambitious target: to produce a $25,000 electric vehicle in three years. Hitting that sticker price -- about $15,000 cheaper than the company’s least expensive model today -- is seen as critical to delivering a truly mass-market product. Getting there means finding new savings on technology -- most critically in the batteries that make up a big part of an EV’s cost -- without compromising safety. Alongside Musk, traditional automaking giants including Toyota Motor Co. and Volkswagen AG are pouring tens of billions of dollars into the race.

Largely because of what goes in them. An EV uses the same rechargeable lithium-ion batteries that are in your laptop or mobile phone, they’re just much bigger. The cells are grouped in packs resembling big suitcases. The priciest component in each battery cell is the cathode, one of the two electrodes that store and release electricity. The materials needed in cathodes to pack in more energy are often expensive: metals including cobalt, nickel, lithium and manganese. They need to be mined and processed into high-purity chemical compounds.