The sharp rise in the prices of raw materials for batteries since the beginning of 2021 has caused speculation about either destroying or delaying demand, and led to the belief that car companies could move to the cheaper option for their electric cars.

Sharp hikes in the prices of raw materials for batteries since the beginning of 2021 have caused speculation about either destroying or delaying demand, and led to the belief that car companies could change their preferences for their electric vehicles.

The least expensive package has always been lithium, iron and phosphate, or LFP. Tesla has been using LFP for its entry-level models made in China since 2021. Other automakers such as Volkswagen and Rivian have also announced that they will use LFP in their cheaper models.

Nickel-cobalt-manganese batteries are also an option. It requires a similar amount of lithium to LFP, but contains cobalt, which is expensive and its production process is controversial.

The price of cobalt is up 70% year over year. Nickel has seen turmoil recently after a short squeeze on the London Metal Exchange. Three-month nickel price is trading in an intraday range of $27,920 – $28,580/metric ton on May 10.

Meanwhile, lithium prices have risen more than 700% since the beginning of 2021, leading to a huge jump in battery pack prices.

According to S&P Global Market Intelligence, metal costs for Chinese batteries in March were up 580.7% year over year for LFP batteries on a dollar-per-kg basis, rising to nearly $36/kWh. NCM batteries are up 152.6% over the same period to $73-78/kWh in February.

“The way lithium has been priced over the past 12 months, it’s discounting less than you’d expect [against NCM] Once the performance factors are factored in, the decision becomes more difficult. “You might want to give up some performance for cost, but it’s not much cheaper these days,” said one cobalt hydroxide seller.

“There were concerns, in fact, because the cost of the LFP was going up a lot for its target segment, which is low-cost batteries,” the lithium producer source agreed.

“There are no clear alternatives to nickel-dense batteries (those with 8 parts or more of nickel) in the short to medium term. The return to low-nickel NMC batteries is re-raising concerns about cobalt use, while LFP batteries cannot yet fully match range performance and also the relatively unfavorable low-temperature characteristics compared to nickel-dense batteries,” Alice Yu, Senior Analyst, S&P Global Market Intelligence.

While the chemistry of choice in China is the LFP battery, NCM is generally assumed to play a larger role in EU markets – where consumers prefer cars that take them across the country or across the continent at the lowest cost.

“When looking at battery plant design, we look at flexibility. Currently there is price parity between LFP and NCM. If LFP becomes a lot cheaper again, maybe we can prioritize production, but for now we have to produce NCM because it is a premium product,” A car OEM said.

Another auto maker echoed this comment, “LFP batteries will be available for entry-level vehicles, but they will not be approved for premium vehicles.”

limiting factor

The supply of lithium remains a major concern for the electric vehicle market and something that could prevent any company from easily switching to LFP.

Research by S&P Global Commodity Insights shows that if all the pipeline lithium mines were to run in the proposed timeframe, with proper specifications for battery materials, there would still be a shortage of 220,000 metric tons by 2030, assuming demand reached 2 million metric tons. at the end of the contract.

Lithium deficiency roadmap

Most Western lithium producers own the bulk of their production booked under long-term contracts, and Chinese converters have been occupied with spot and long-term contract requirements.

“There are many [spot] “The orders are, but we don’t have any materials available at the moment,” the lithium producer source said. “We only have quantities available when a customer has a problem, or cancels a shipment for some reason, otherwise it will be fully booked,” he added.

Increasing concerns about lithium and other battery metals, which have become a limiting factor in electric vehicle adoption, have led to more automakers getting involved in the upside of the industry.

General Motors will invest in the development of the Hell’s Kitchen lithium project in “Hell’s Kitchen lithium” in California. Stellantis, Volkswagen and Renault have partnered with Vulcan Resources to secure materials from the Zero Carbon project in Germany.

Sodium ion substitute

Given the expected shortfall in supply from lithium, cobalt, and nickel, the battery industry has been exploring alternatives. Sodium-ion batteries are one of the most promising options.

Sodium carbon is usually used as the anode and the material from a class known as Prussian blue is used as the cathode. According to Venkat Srinivasan, director of the Argonne Collaborative Center for Energy Storage Science (ACCESS), there are “a range of minerals that can be used on Prussian blue, and it will vary by company.”

The sources said that the biggest advantage of sodium ion is the low cost of production. Due to the abundance of sodium on Earth, these battery packs can cost about 3%-50% less than lithium-ion batteries. The power density is comparable to that of LFP.

Contemporary Amperex Technology (CATL), one of the largest battery manufacturers in China, unveiled the first generation of sodium-ion batteries last year, along with its AB battery pack solution, which showed it was capable of integrating sodium-ion and lithium-ion cells. . cells in one package. CATL said the manufacturing process and equipment for the sodium-ion battery are compatible with the current lithium-ion battery.

But before sodium ions can reach a significant commercial range, some concerns must be addressed.

There are still some improvements to be made on the electrolyte and anode sides.

Compared to the LFP-based battery, the sodium ion is stronger when discharging but weaker when charged.

The main limiting factor is that this is still some time frame to be available commercially.

Likewise, billions of dollars of investment have been poured into the lithium-ion supply chain based on lithium-nickel-rich chemistry.

“We will definitely look at sodium ion,” said one battery manufacturer, “but we need to focus first on technologies that already exist and bring the plant online.”

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