Cheap batteries have been a key factor in the large-scale use of electric vehicles for some time. Until recently, with advances in technology and increased efficiency, battery costs have been steadily decreasing. But then, because of the global outbreak, it has caused huge damage to every industry and supply chain.
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Compared to the London Metal Exchange (LME), lithium prices are currently rising to record highs. On Friday, the report came at a price of $27 for one kilogram of lithium hydroxide, one of the three types of lithium traded on the global market. Other forms of battery-grade lithium are also developing at a rapid pace, and as shown below, this trend is threatening the electric vehicle revolution.
This car overhaul is driven by the kinetic energy that automakers provide to their electric vehicles, driving greater distances. But mainly due to cheaper batteries (the result of economies of scale), these cars have become more affordable.
However, economies of scale are being postponed for the foreseeable future due to shortages of various raw materials around the world.
Chinese electric vehicle giant BYD said last week it would raise the price of its batteries by at least a fifth from November. report. The company cites not only the price of lithium, but also the price of cobalt as a reason for the price increase. BYD said the price of lithium cobalt oxide, a compound used in battery cathodes, has more than tripled since last December. The company also said electrolyte prices soared 150 percent over the same period.
This problem seems to be particularly serious in the home country, which has a large number of battery manufacturers, but it is unlikely to be limited to our country. BYD, for example, doesn't just use batteries on its own cars. It also supplies batteries for Toyota and Ford.
The CEO of Benchmark Mineral Intelligence said: "The market may have to reposition to accommodate a period of rising battery prices, which is a new phenomenon for an industry conditional on an expected decline in annual rates.
BMI predicts that if battery manufacturers in South Korea and Japan follow our lead, the price of electric vehicle batteries using nickel, cobalt and manganese will rise from $105 per kWh this year to $115 per kWh in 2022.
In fact, during the energy crisis, the price trend of lithium in China was also significantly affected by factory closures. However, other factors affecting the price of battery metals are also global: many battery metals are in tight supply, while demand is increasing. It's not just lithium.
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Last month, Rystad Energy warned that the shift to an all-electric future in the automotive industry could hit a five-year barrier to a shortage of nickel supplies. The Norwegian consultancy predicts that nickel demand will reach 3.4 million tonnes as early as 2024, above supply. Currently, the demand for nickel is 2.5 million tons.
If anything has changed in the basic foreground of lithium, it is even more worrying. Rio Tinto recently predicted that under the net zero commitment, lithium demand will significantly exceed supply in the coming years, creating a gap that is difficult to fill. The reason it is difficult to fill is that existing lithium projects can only contribute about 1 million tons of supply per year, while demand has grown from 300,000 tons to 3 million tons.
With such a huge gap between the supply of metals and minerals produced by ev batteries and demand, electric vehicles are expected to add a few thousand dollars to the price tag, which will make it harder to sell electric vehicles. Maybe this problem can be solved by additional government subsidies, but subsidies are a tricky tool because subsidies are always borne by taxpayers, who are the targets of electric vehicles anyway.
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