Increasing battery prices increase uncertainty over electric-vehicle costs

Since 2010, lithium-ion battery prices have fallen by an average of 90 percent to $ 130 per kilowatt hour. The magical value of electric vehicles compared to internal combustion engines is approximately $ 100 per kilowatt hour. Many expect the battery industry to reach that point by 2024, a goal that is constantly evolving.

According to Benchmark Minerals Intelligence, which oversees the global battery supply chain, low-cost EV sales have increased by 112 percent globally by 2021 to 6.3 million units last year.

Now, the price of key components in the battery is rising. According to Benchmark, the price of cobalt cobalt has increased by 119 percent since January 1, 2020; by mid-January 2022, nickel sulfate by 55 percent and lithium carbonate by 569 percent.

“What is happening in the supply chain is raising doubts about the price of 100 kilowatts,” said Benchmark Chief Data Officer Caspar Rawles. “We are hearing. [about] Significant price increase for car manufacturers from cell suppliers. He noted that some battery makers who have offered long-term fixed-price contracts have shifted to a more flexible price negotiation, allowing them to transfer some costs to customers.

Most major US and European automobiles have shifted their focus to electric vehicles over the past few years, with demand rising sharply beyond supply. China, which controls the battery supply chain and has the largest EV market in the world, has also significantly increased EV production. Since it usually takes seven to 10 years to open a new mine, many batteries have been in short supply for years.

“There is an increase in demand for all these batteries, and this is a complete link,” says Daniel Clark, a global data analyst in London.

By 2022, the lithium market is expected to see the biggest shortage in tons by 2022, with demand, labor problems and VV-19 disruption, according to Benchmark. The price of EV cars in China has started to increase, by BYD Co.

Increasing the price tag on some models by more than $ 1,000, says Benchmark.

Tesla Inc.

According to CEO Elon Musk last year, one of the biggest threats to raw materials is nickel. “So we hope this message goes out to all mining companies,” he said in a statement. “Please get Nickel.” Tesla has a contract to acquire Nickel from BHP Group. Ltd.

The world’s largest mineral market.

New projects also often face opposition from nearby communities, which raises questions about expanded supply. “This’s what it means for the project and for the people of Serbia,” he said in a statement in January.

Some factors may reduce interest. Mining companies can quickly expand their existing operations instead of launching new projects. Battery recycling is a growing business and supply chain is expanding. And new battery chemistry can offset the demand for certain materials, such as cobalt and nickel.

A more affordable battery technology supported by Tesla in China may provide some relief. Batteries using lithium iron phosphate or LFP accounted for 57 percent of China’s total battery production last year, less than half of last year, according to Chinese official data.

The batteries use cheaper and more abundant metals in their cathouses than expensive metals such as nickel and cobalt. The technology’s obstacle is a shorter range than standard lithium-ion batteries commonly used in nickel and cobalt.

Battery maker Sila Nanotechnology Inc. and former Tesla CEO Jean Berdievsky “LFP serves as a good help valve in those supply chain shocks.

Last year, a sudden explosion of LFP batteries helped increase costs for lithium-ion batteries by 10% to 20 percent in the last 2021 months, according to IHS Markit. And because LFP batteries use lithium as an electrolyte, they are exposed to high pressures in white metal.

According to Benchmark Mark Raul, lithium supply phones will be used mostly when goods are depleted by 2021. Lack of supply could lead to temporary plant closures on batteries and cars, he said. Lithium carbonate equivalent, the standard net metal used in batteries, has grown by about 40% over the previous year to 491,896 metric tons and is expected to double to 1.1 million tons by 2025, Benchmark reports. .

An alternative to lithium crude is electrolyte. China’s Contemporary Amperex Technology Corporation, the world’s largest electric car battery maker and Tesla supplier, last year reduced the amount of lithium in the cell sodium-ion battery. Although the technology is being tested, CATL plans to build a complete supply chain for battery chemistry by 2023.

Experts say the proliferation of new battery technology poses technical and logistical risks. “CATL is very high on sodium ion, but any technological change is a slow process,” Mr Raoul said.

When new mining projects come into line, the bottlenecks in the battery supply chain must be made of steel by the middle of the decade. And with so many cars joining the race, EV prices continue to plummet, despite rising commodity prices.

“I started working on electric vehicles in 2001, I was an employee of Tesla 7, so I think in a very long arc,” said Mr. Berdievsky of Sila. “After ten years, the EVs will dominate.”

Write Scott Patterson at scott.patterson@wsj.com