A new research note from battery supply chain
specialist and price reporting agency, Benchmark Mineral Intelligence, has a
warning for carmakers about the direction of battery prices used in
electric vehicles – that they won’t fall indefinitely.
Andrew Leyland, Head of Strategic Advisory at
Benchmark, points out that lithium-ion battery cell prices have fallen from
$290 per kiloWatt hour six years ago to $110/kWh today, driven by
economies of scale and technological improvement.
“WORRYINGLY ENOUGH MANY
AUTOMOTIVE BOARD MEMBERS STILL EXPECT BATTERY COSTS TO CONTINUE TO DECLINE AT
PACE WITHOUT UNDERSTANDING THE SUPPLY CHAIN THEY ARE AT THE END OF”
Andrew Leyland, Head of Strategic Advisory at
Benchmark
Some industry forecasts have prices falling as low as
$60 to $70/kW. Not so fast, says Leyland:
“Worryingly enough many automotive board members
still expect battery costs to continue to decline at pace without understanding
the supply chain they are at the end of.
“Price volatility is introduced to the automotive
battery supply chain at the mineral extraction phase. Here prices are
determined by the market fundamentals of supply, demand, cost and inventory
level.”
Given the chasm between
future demand for battery raw materials used in electric vehicles and new
supply entering the market over the next decade, the current low price
environment for lithium, cobalt, graphite and less so nickel is not likely to
endure.
Benchmark estimates lithium supply has to double
every four to five years to meet demand. For the other metals, additional
supply required is of similar magnitude, but incentive for new mining projects
is simply not there at today’s prices.
Sourcve: mining.com