Ms. Zhou, who lives in Seattle, USA, has been a little annoyed recently.
She took a fancy to Tesla Model y electric car last year. While hesitating whether to buy it, she watched the price of the long-range version of the car rise all the way to $58900 (about 375000 yuan).
“If I could have expected that the price of this model was adjusted nearly ten times in the United States last year, I should have started earlier. However, I still have some concerns about electric vehicles, so I still need to think more.” “I pay more attention to the sense of driving, but electric vehicles generally can’t drive more than three hours continuously. Even if the journey takes only two hours, I have to look for a charging pile immediately after reaching my destination,” she said in an interview with China business news
For the hot electric vehicle prices, Tesla said that the price adjustment reflected the actual situation of cost fluctuations. “We are facing the problem of uncertain environment and cost structure.” Zachary kirkhorn, Tesla‘s chief financial officer (CFO), previously said at the earnings meeting.
In fact, since the end of last year, battery prices have been rising, which is adding great uncertainty to the cost of electric vehicles. According to the data of IHS Markit, the price of lithium-ion battery increased by about 10% ~ 20% in the late 2021. According to Bloomberg New Energy Finance (bnef), by the end of 2021, the average price of global lithium-ion battery pack was US $132 / kWh (about 840 yuan).
Li Gangfeng, an analyst at European Mining Fund commodity discovery, said in an interview with China business that the reason for the rise in battery prices and costs is due to the surge in sales of electric vehicles and the shortage of raw materials for upstream batteries, resulting in an imbalance between battery supply and demand. “The biggest risk of the electrification transformation of the global automotive industry is that there is not enough upstream raw materials, which may threaten the transformation goal of electric vehicles in many countries.” He said.
why did the battery price rise
Li Gangfeng said that the main reason for the recent rise in battery prices is that the sales of electric vehicles soared last year, driving the growth of battery demand. But the price of key metals in batteries is soaring, reducing battery supply.
According to benchmark mineral intelligence, an organization that tracks the global battery supply chain, the global sales of electric vehicles increased by 112% year-on-year to more than 6.3 million in 2021. From early January 2020 to mid January 2022, the prices of battery grade cobalt, nickel sulfate and lithium carbonate increased by 119%, 55% and 569% respectively. Taking the ternary material battery as an example, the cost of cathode materials containing lithium, cobalt, nickel and other metal elements accounts for nearly 50% of the cost of battery materials.
Li Gangfeng believes that the gap between battery demand and supply is mainly due to the large time difference in mining minerals, setting up battery factories and producing cars in the electric vehicle industry chain. According to the statistics of American media, it usually takes 10 years to open a new mine, about 3 years to build a battery factory, and the R & D cycle of an electric vehicle is about 2 years. About every 10 hours, a Tesla car goes offline from the factory.
Li Gangfeng further explained that compared with batteries and electric vehicles, the production cycle of upstream minerals is longer. In addition to its own production problems, it also lies in the large external resistance during development and mining. “The problem in Europe is the opposition of surrounding residents, the problem in North America is the lack of local enthusiasm, and the problem in Latin America is the gradual rise of resource nationalism.” He said.
In Serbia, Spain and other European countries, a large number of local residents and environmental protection organizations oppose the construction of lithium projects. In North America, from the perspective of the progress of upstream projects implemented by mining companies and battery raw material projects implemented by investors, their enthusiasm is lower than that of Asia Pacific countries, resulting in the slow progress of the project. The Chilean government, one of the world’s largest lithium producers, has increasingly unfriendly mine development policies. Recently, the constitutional assembly of Chile passed a proposal aimed at promoting the nationalization of important assets such as copper and lithium in the country.
Zeng Youpeng, an analyst at trend force Jibang consulting, said in an interview with China business news that the reason why the price of upstream raw materials rose and the battery supply was affected was that some battery manufacturers lacked international pricing power. At present, lithium, cobalt and other new energy metals lack a more transparent trading mechanism, and battery manufacturers are difficult to avoid the risk of price fluctuation.
Generally speaking, the control of bulk commodities means the pricing power. According to the US Geological Survey (USGS), 44%, 22% and 9% of the world’s lithium reserves are distributed in Chile, Australia and Argentina; 50.7% of cobalt reserves are concentrated in the Democratic Republic of the Congo. The above mines are mainly controlled by giants such as Chile mining and chemical industry and Glencore of Switzerland.
In terms of trading, compared with non-ferrous metals such as copper and aluminum, lithium and cobalt lack a large transparency mechanism at present. The main transaction mode is the direct connection between the mine resource end and the spot of end customers. It was not until the middle of 2021 that the Chicago Mercantile Exchange and the London Metal Exchange listed lithium futures contracts respectively. In January, the Singapore Stock Exchange said it planned to launch lithium and cobalt futures contracts in the first half of 2022.
hopeless if the cost is less than $100 / kWh?
In the electric vehicle market, “reducing the battery cost to $100 / kWh (about 640 yuan)” has always been regarded as a milestone – if the battery cost is reduced to this price, consumers will use electric vehicles more cost-effective than fuel vehicles.
“Previously, it was expected that this milestone could be reached in 2024. But now, we are getting farther and farther away from this goal.” Caspar rawles, chief data officer of benchmark mineral intelligence, said. Bloomberg New Energy Finance said that if there are no other improvement measures that can reduce the current impact, it may delay the schedule of reducing the price of lithium-ion battery to $100 / kWh for two years.
Haitong Securities Company Limited(600837) Li Xuan, a senior analyst in the technology industry, said in an interview with the first financial reporter that the price of raw materials will still rise because the supply and demand fundamentals of battery raw materials will still tighten. At the same time, the demand for electric vehicles will also rise. This means that battery prices are easy to rise but difficult to fall in the next year.
China Securities Co.Ltd(601066) it is predicted that the global lithium resources are expected to achieve 730000 tons of lithium carbonate equivalent supply in 2022. Based on the global sales of 9.41 million electric vehicles in 2022, the global demand for lithium resources is expected to be about 700000 tons of lithium carbonate equivalent in 2022.
Bloomberg New Energy Finance (bnef) said that the battery demand may increase more than 20 times in the next decade, and its scale may reach TWH (billion KWH).
However, Li Xuan reminded that the soaring price of upstream raw materials will increase the cost of electric vehicles, which will gradually affect the terminal demand, and then affect the sales of electric vehicles and batteries.
Zeng Youpeng also said that in 2022, financial subsidies for electric vehicles in Germany, France and other countries continued to decline. Considering that most of the electric vehicle manufacturers have not yet achieved profitability, there is little room for vehicle enterprises to absorb the rising cost of battery raw materials.
Benchmark mineral intelligence said that at present, some battery manufacturers providing long-term fixed price contracts have provided variable price transactions to electric vehicle enterprises. This “cost transfer” clause makes electric vehicle manufacturers have to bear the impact of rising raw material costs.
seek all kinds of new alternative batteries
In the face of the current shortage of raw materials in the upstream, many enterprises are still “sweeping mines” all over the world. Recently, Sinomine Resource Group Co.Ltd(002738) (002738. SZ) invested 1.1 billion yuan to acquire lithium mines in Africa. Benchmark mineral intelligence said that in addition, both vehicle enterprises and battery manufacturers have many ways to deal with the current rising trend of battery prices.
Recently, Tesla, BMW, Renault, Ford and other auto companies have said that they will consider switching to more cost-effective lithium iron phosphate batteries. This allows batteries to use cheaper iron in the cathode rather than more expensive metals such as cobalt and nickel.
Benchmark mineral intelligence also said that battery manufacturers can also develop battery recycling business. As the new battery chemical composition can offset the demand for metal materials such as cobalt and nickel, it will continue to expand the supply source of upstream raw materials.
The potential solution to the lithium shortage is to replace electrolytes. Last year, a battery manufacturer launched a sodium ion battery, which greatly reduced the lithium content of the battery. Although the technology is still in the pilot stage, the company said it plans to establish a complete battery supply chain by 2023.
Gene Berdichevsky, CEO of Sila nanotechnologies, a battery parts manufacturer and former employee of Tesla, said that using lithium iron phosphate battery instead of ternary material battery is a better solution at the moment.
However, in Li Gangfeng’s view, any innovation and large-scale production of battery technology will face certain risks. At present, there is still a distance from the production of battery technology and mature design.
Benchmark mineral intelligence said that with the continuous launch of new mining projects, it is expected that the bottleneck of the battery supply chain may be solved in the second half of the 21st century. Although commodity prices are rising, battery and electric vehicle prices are expected to decline at that time as more manufacturers join the competition in the electric vehicle market.
