The demand for better and robust batteries is ever-increasing. People from around the world, including South Africa, are moving towards better power resources. However, as the demand for batteries grows in South Africa, so do their prices.
For the last 10 years, battery prices have shown a steady trend. But as of 2021, a 15% increase in battery prices has been observed. This blog post explores the various reasons that have led to the sudden inflation in the South African battery industry. Let’s look into them one by one below.
Factors That Contribute to a Rise in Battery Prices
The sudden increase in battery prices is not due to one or two reasons but is a collective outcome of many reasons. These include:
1. Supply and Demand
The general rule of supply and demand says that when there is less supply of the materials and the demand for the product is high, the prices are increased to keep up with the demand.
In recent years, many reasons, such as the pandemic, the global shift towards remote working and e-learning, and the environmental shift to sustainable resources have increased the use of battery-operated devices. This has created a supply and demand imbalance leading to higher battery prices.
2. Cost of Raw Materials
The price of the final product significantly depends upon the cost of the raw materials. The main raw materials essential for battery production are lithium, cobalt, and nickel. As mentioned earlier, the increasing demand for these materials, coupled with limited supply, has resulted in higher prices for these materials.
Furthermore, the nonrenewable nature of the raw materials is monopolized by countries having natural reserves of these minerals, selling them at a higher price as the demand for these raw materials increases.
3. Global Events
Global happenings like the COVID-19 pandemic and the recent invasion of Ukraine by the Russians have disrupted the global supply chain affecting all kinds of industries, including the South African battery industry. By disturbing this supply chain, there may be a shortage of raw materials, driving up battery prices.
4. Fluctuation of the Foreign Exchange Rate
All international imports and exports are dealt with in the foreign currency, meaning any fluctuation will increase prices in the local currency. When it comes to South Africa, this is particularly true as most of the components required for battery production are imported from other countries.
5. Government Policy and Taxes
Another factor that causes an increase in battery prices in South Africa is their government import policies and taxes. The state government recently raised the value-added tax (VAT) on all imports, directly affecting the battery prices in the country.
Conclusion
Many factors can result in increased battery prices in South Africa. These increasing prices are a great concern for people who rely on these batteries for their everyday lives.
Therefore, to conserve your batteries and prolong their lives, it is essential to keep them in check and provide proper maintenance. Deltec Batteries has the perfect solutions for all your battery problems. Contact us for any battery problem anytime, and get instant solutions!
Resources
- https://www.utilitydive.com/news/battery-prices-to-rise-for-first-time-since-2010-slowing-ev-adoption-bnef/626919/
- https://www.theafricareport.com/21865/africa-must-assume-its-place-in-the-global-battery-race/
- https://revov.co.za/news/cushioning-south-africa-from-the-rising-price-of-lithium-ion-batteries/
- https://www.mordorintelligence.com/industry-reports/south-africa-battery-market
- https://asia.nikkei.com/Spotlight/Market-Spotlight/Battery-costs-rise-as-lithium-demand-outstrips-supply