The price of lithium — a key component in the manufacture of modern electric cars — continues to blow past high after record high, having smashed through the 500,000 yuan “barrier” Friday, according to data from Asian Metal Inc.
The China Passenger Car Association raised its forecast for new EV sales in China to a record 6 million units this year — more than double the total number sold in 2021. Bloomberg Intelligence also suggests that battery use — both for EVs and as residential and commercial energy storage — is expected to double, driving demand for lithium even higher.
“EV production and sales have held steady in recent months,” according to Rystad Energy, a research firm, which added there are concerns over whether China’s power crisis could return this winter when demand for heating rises. “This could lead to new power shortages and hit lithium operations,” which means they’re expecting lithium prices to stay at these record-high levels through to the end of 2022.
China and the Inflation Reduction Act
In a recent episode of CleanTech Talk, Loren McDonald and I look at who really stands to benefit from the recently passed Inflation Reduction Act, and explore how the new law could really be thought of as a piece of “anti China” trade policy, instead of a fiscal or infrastructure build-out bill.
It could be argued that the net effect of that bill — if not its intent — is that Chinese lithium producers will be effectively cut out of the North American auto market, just as that market begins to come into its own in the wake of the Ford F-150 Lightning and Chevy Silverado EV driving electric pickups into the mainstream. With high prices like these, however, it’s hard to fault American car companies for looking for local lithium suppliers — especially when one of China’s top battery producers, Ganfeng Lithium Co., told customers last week that prices for new orders would be reassessed amid a substantial hike in power-cell costs.
That’s my take, anyway. What’s yours? Do you think this is all a bunch of posturing that won’t amount to much, or do you think record high prices in China as well as the IRA will accelerate the development of North America’s supply chain? Scroll on down to the comments and let us know!
Source: Bloomberg | Image: Psyber Artist (CC BY 2.0 license).
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