The high cost of raw materials threatens the development of the electric car

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The rise in lithium, nickel and cobalt, essential for the batteries of these vehicles, has pushed prices up

“The price of lithium has soared to insane heights!”. Elon Musk, founder and self-proclaimed “technoking” of Tesla, tweeted this in early April. The new white gold is one of the essential raw materials in the transition and electrification of mobility. Electric car batteries, depending on the age of the vehicle and also the manufacturer, have one or another material, although the most common are lithium, nickel and cobalt.

The holy trinity of the new mobility that, like the rest of materials and products, has seen its price skyrocket in recent months. “We are investing in new technologies for our batteries with the aim of lowering their costs,” Renault sources respond to this newspaper.

Just as basket prices have become more expensive, so too have the minerals that start electric vehicles with the feared rise in inflation. In recent months, lithium carbonate has grown by 431% and lithium hydroxide by more than 450%. “This is part of the perfect storm that the sector is going through,” they point out to the French company.

The semiconductor crisis has already held the automotive industry in check, and now raw materials threaten to bring the new electric motors to a halt. “This, together with the semiconductor supply situation – which will represent an estimated loss of 300,000 units by 2022 – has led us to prioritize products with high added value,” they explain from Renault.

Last 2021, car sales closed a record year with a total of 27,769 registered units, which is 37.76% more than in 2020, according to Anfac. An increase that was accompanied by a significant price increase. An average of 26,105 euros for a car in this range, an amount that has fallen far below the current amount of 8,200 euros to an average of more than 34,000 euros.

Inflation driven by battery commodities that have doubled in value in just 24 months. “Only the cost of the specific materials to develop these vehicles has increased from Euro 1,950 (about $2,000 at current exchange rates) to Euro 4,395 ($4,500),” said AlixPartners consultancy. For its part, the average price of raw materials to bring electric cars to life has “almost tripled”, emphasizes the consultant.

In two years, the costs have increased from 3,300 to more than 8,000 euros. A figure that is far removed from that of cars with an internal combustion engine, which use steel as the main component and whose price in 2022 will average 3,225 euros. However, this figure is 106% higher than the figure recorded in March 2020, just before the outbreak of the coronavirus.

The scarcity of these minerals and whose demand does not stop growing because it is not only a raw material for the automotive industry, but also for the technology industry, has triggered the curve up, but “they have already reached a ceiling”, responds Credit analysts Swiss. “In reality, we could see the market return to equilibrium or even a surplus in the next 18 months,” they bet. The fever for this new white gold, for nickel and for cobalt has led all kinds of companies to look for these minerals in every corner of the planet.

“The industry needs to build 50 additional lithium mines, 60 nickel mines and 17 additional cobalt mines by 2030 to meet global targets for net carbon emissions,” warns the International Energy Agency (IEA).

Chile, Australia and Argentina currently account for 90% of the global lithium supply. “We’ve seen many new mines come into production fueled by high prices,” Saul Kavonic, Credit Suisse’s head of energy research, said in a letter to investors.

The United States and China are two actors that have started their mines of this mineral. Europe, for its part, focuses on the Iberian Peninsula to implement it.

Since 2012, the price of a ton of lithium has multiplied by nine. “There is no shortage, but the rate of extraction is slow,” one of several warnings Tesla founder Elon Musk wrote on Twitter earlier this year.

“Tesla may need to start mining and refining on a large scale right away unless costs improve,” it added in another 120 characters. A company that has reported billions of dollars to one of Tesla’s major competitors, BYD.

Chinese automaker BYD has taken care of the entire production chain of its vehicles, from mineral extraction to the assembly of its cars. BYD recently obtained a concession from the Chilean government to mine 80,000 tons of lithium.

Although lithium is found in large parts of the planet, its crude extraction is not valid for battery production. Its use requires refinement. “It’s a license to print money,” Musk warned earlier this year.

But there is another business to discover: battery recycling. An as yet unexplored process, but that would reduce the need to extract and refine virgin lithium. Two techniques with high environmental costs, as several scientific studies assure that “about two million liters of water are needed to produce one ton of lithium”.

Source: La Verdad

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