Nickel price surge could threaten automakers’ EV plans
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On April 2, 2021, a driver charges his electric vehicle with a fast-charging station at John F. Kennedy Airport (JFK).
Getty Images News – Getty Images| Getty Images News | Getty Images
As investors reflect on the global realities, the nickel price is rising as buyers take note of Russia’s new situation: Russia is a major supplier of the metal and is currently facing severe sanctions. invasion of Ukraine.
London Metal Exchange has taken an unprecedented step. suspended nickel tradingAfter three-month contracts prices increased more than twofold to above $100,000 per ton, Tuesday was the first day of February
Nickel is a critical ingredient in the lithium-ion battery cells used in most electric vehicles sold in – and planned for – the U.S. market. Investors and analysts are raising serious questions regarding the ambitions of electric-vehicle manufacturers.
Morgan Stanley analyst Adam Jonas was one of the most vocal voices to raise concerns. A note published MondayHe stated that nickel was up 67.2% as of today. This represents a roughly $1,000 increase in input costs for an average electric vehicle in the U.S.
Jonas stated that investors need to lower their expectations about automaker earnings, as well as for electric-vehicle adoption over the next few decades, since nickel’s sudden price spike could jeopardize the ambitious EV plans of global automakers. General Motors Ford Motor.
Why nickel is crucial for EV battery batteries
Three layers are present in lithium-ion batteries:
- A cathode made up of lithium and nickel, as well as other minerals like cobalt or manganese.
- Anode made from carbon graphite, sometimes with silicon
- A separator constructed of porous polymers
A liquid electrolyte is also available, which can be made of lithium salt and dissolved in solvent.
The lithium ions move from the anode to cathode when the battery is charged. When the battery is turned off, lithium ions are driven back to the cathode and released energy.
Recent years have seen automakers discover that adding more nickel in the cathode increases a battery’s efficiency. That means more range per pound.
In the past, lithium-ion batteries had cathodes made of about one-third nickel. Automakers have been increasing the nickel percentage in the cathodes over the years to improve the batteries’ energy density, and extend the vehicle range. The majority of cathodes now contain at least 60% nickel.
Some people use higher amounts of cobalt to lower or eliminate it, while others do so to improve density for high-end applications. LG ChemSupplies TeslaAre 90% nickelFor instance,
Before the war, analysts raised concerns.
For electric vehicles, high-nickel batteries have significant benefits. However, nickel was not cheap before Russia invaded Ukraine. Experts were concerned about a possible shortage of nickel as automakers around the world ramp up production.
Rystad energy analysts predicted last fall that there is a shortage of high-grade nickel needed for EV battery production. likely to outstrip supplyA message for 2024 has since been echoedJonas is backed by Morgan Stanley counterparts.
Due to nickel’s high cost and supply concerns, many automakers believe that lithium-ion battery with high-nickel electrodes will only be suitable for high-end applications. These batteries have to be high in energy density (as is the case with heavy trucks), or they will not sell as well (as luxury sedans).
What could happen if there is a price increase?
Assuming that nickel’s price increase is sustained, the quick and obvious takeaway is that electric-vehicle costs will go up – and more so for higher-end EVs.
It will be difficult for automakers to decide whether they want nickel at the pre-invasion price. Automakers can decide to take on the increased cost, or to try and pass that onto consumers. They will most likely choose to do both.
However, not all EVs are affected. Although it is cheaper, there’s an alternate type of battery available. LFP (lithium ironphosphate) batteries are made with iron phosphate. They do not require nickel or cobalt.
LFP cells cost less than lithium-ion cells, but they also have lower energy density – meaning that LFP battery packs are heavier per mile of range than their lithium-ion counterparts. LFP batteries are not ideal for high-end vehicles due to their weight. This can limit performance and hinder vehicle handling. This is less important for mass-market vehicles that are priced competitively. Chinese automakers used LFP battery technology in lower-cost electric vehicles over many years, despite being under pressure from the government to adopt EVs.
LFP technology was given a boost of visibility in America by Tesla began using LFP batteriesLast fall, Tesla introduced its entry-level standard range models. At the time, the move to LFP was seen as a way for Tesla to lower the cost of producing those models – or put another way, to increase the profitability of those entry-level vehicles without increasing prices.
Now, with nickel prices skyrocketing, we may – once again – see major global automakers following Tesla’s lead.
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