The dynamics of tightening supply and soaring demand for electric vehicle batteries are becoming increasingly fragile. Battery manufacturers are now looking into new technology with advanced chemistry compositions to ensure long-term metals supply, but progress will be impacted by the outlook for metals prices.
Surging battery metal prices pose challenges to the EV industry
The rapid increase in electric vehicle sales during the Covid-19 pandemic has exacerbated concerns over China’s dominance in lithium battery supply chains. Meanwhile, the ongoing war in Ukraine has pushed prices of raw materials – including cobalt, lithium, and nickel – to record highs.
The dependence on specific suppliers is not the only concern. Batteries make up a big part of an EV’s total cost and typically account for 30% to 40% of their value, but this proportion increases with larger battery sizes.
Rising demand for EVs amid tightening supply chains has also pushed prices of battery materials (including cobalt and lithium) to multi-year highs. This impacts prices, which in turn makes consumers more hesitant to make the shift to electric vehicles.
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