As 2022 draws to a close, the price of lithium-ion type batteries has gone up for the first time in more than a decade, with surging raw material and transport costs driving the cost hike, and rising demand set to challenge the car industry’s efforts to achieve price parity with fossil fuel powered (ICE) vehicles.
“Amidst these price increases for battery metals, large battery manufacturers and automakers have turned to more aggressive strategies to hedge against volatility,” said Evelina Stoikou, an energy storage associate at BloombergNEF, “including direct investments in mining and refining projects.”
One company that’s seemingly way ahead of the curve on this is, of course, Tesla. Its controversial CEO Technoking, Elon Musk, said in an August earnings call, “I’d like to once again urge entrepreneurs to enter the lithium refining business. The mining is relatively easy, the refining is much harder.” Musk went even further, saying that, “You can’t lose (with lithium refining), it’s a license to print money.”
In China, the world’s largest auto market and a key region for Tesla, lithium prices have gone up by more than 450% this year. China maintains more than 50% of the global lithium refining capacity at this time, but other countries, like Chile and Canada, are pushing ahead to increase their capacity, as well.
That push means that there is rising demand for EV battery materials, but not necessarily a rising supply. Charles Morris, over at EVANNEX, wrote, “Some industry experts are making dire predictions of looming shortages of critical minerals. One exec at a battery manufacturer recently told me that, while it might only take two years to build a battery gigafactory, it takes at least eight years, and sometimes much more, to bring a new lithium mine into production.” (Emphasis mine.)
He continues, adding that, “commodities analysts have also been sounding warnings about supplies of graphite, nickel, cobalt and a long list of specialty materials that are needed for (EV battery production).”
What’s the takeaway here? It’s hard to say, but you can’t ignore that there’s a lot of significant uncertainty about when EV battery prices will come down, and if you’ve got your hands on a nice lithium deposit, you stand to make a whole buttload of money!
Sources: Financial Times, EVANNEX.
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