×

Please verify

Watch LIVE

The cost of lithium — a metal used to make electric car batteries — is up nearly 500% since last year: 'Supply is simply nowhere near enough to feed this demand surge'

News
George Rose/Getty Images

The race to a low-carbon future via electric vehicles already comes with a hefty price tag. But that price tag may enlarge even more in the coming months if the skyrocketing cost of lithium serves as any indication.

What are the details?

The cost of lithium carbonate — a key ingredient used in the manufacturing of electric vehicle batteries and other low-carbon energy resources such as solar panels — has jumped 95% already in 2022, and is up almost 500% year-over-year.

According to Benchmark Mineral Intelligence, a leading price reporting agency, battery-grade lithium carbonate (EXW China, ≥99.5% Li2CO3) was averaging a whopping $76,700 a tonne in mid-March. During the same month last year, the metal was trading at $13,400 a tonne.

Benchmark reportedly added that based on reports out of China, things aren’t going to get any easier in the short term due to continued low inventory levels. China is a major producer of the mineral, selling nearly 20% of the world's supply.

But it's not just lithium. Nickel, another metal that serves as a key component in lithium-ion batteries used in EVs, has undergone an eye-popping price surge of late. On March 8, nickel prices more than doubled in a matter of hours, CNBC reported. While the price has come down from its apex in recent days, it still remains significantly inflated.

It should be noted the surge in the price of nickel is especially related to Russia's war in Ukraine, as Russia remains the metal's third-largest producer.

Why does it matter?

Overall, the news of soaring costs for lithium and nickel spotlights what some say is a market completely unprepared for the surging demand for electric vehicles.

"The price explosion tells you that lithium supply is simply nowhere near enough to feed this demand surge," OilPrice.com reported.

S&P Global reported earlier this year that supply stands almost no chance of catching up to demand, which has erupted over the last 18 months.

"Although the battery industry has been investing significantly in downstream battery capacity to power the surging EV demand, lithium is still getting less funding than required — and such investment could be too late to prevent a structural deficit in the coming years," S&P said.

It added the "structural deficit" could last "throughout this decade."

Yet the Biden administration continues to push EVs as a remedy not just for environmental woes but economic ones, as well.

In a press conference earlier this month, as gas prices soared as a result of the Russia-Ukraine war, Vice President Kamala Harris and Transportation Secretary Pete Buttigieg unabashedly claimed that "clean transportation can bring significant cost savings for the American people."

Perhaps they forgot that new EVs cost an average of $56,437, according to Kelley Blue Book. Prices at the pump would have to soar much higher than their current average for Americans to switch to EVs for strictly cost-saving benefits.

Now it appears the cost of manufacturing or replacing EV batteries will grow higher. Total cost of the vehicles will likely follow.

Most recent
All Articles