Prices Of Nickel, Cobalt For EV Batteries Surging

Rising sales of electric vehicles (EVs) and a scramble along the supply chain to secure materials have propelled prices of battery ingredients nickel, cobalt, and lithium to multi-year highs, Pratima Desai recently reported for Reuters.

Photo Insert: Nickel, cobalt and lithium are essential components of EV batteries.

"Raw material prices and availability are starting to have an impact on prices of battery cells, suppliers were notifying customers of increasing prices late in 2021," said Benchmark Mineral Intelligence (BMI) analyst Caspar Rawles.

EV batteries are charged and discharged by the flow of lithium ions between the graphite-containing anode and the cathode. Cathodes contain nickel which delivers high energy density, allowing the vehicle to travel further.

Cobalt ensures cathodes do not easily overheat or catch fire and it helps extend the life of batteries which automakers usually guarantee for eight to 10 years.

Tesla batteries use nickel-cobalt-aluminum (NCA) but the dominant cathode chemistry in the auto sector is nickel-cobalt-manganese (NCM.) The original ratio was 1-1-1. Moves to include more nickel to boost energy density and extend driving range initially saw a shift to 5-3-2 and 6-2-2.

Many automakers are now looking at 8-1-1. LG Energy Solution is supplying batteries with cathodes containing 90% nickel to Tesla. Volkswagen declined to comment on the ratio it uses but sources say its batteries use 7-1-2 cathodes.

Volkswagen said it likes lithium phosphate (LFP) batteries because they contain no cobalt or nickel and "supply is secure."

"LFP is robust over many charging cycles at lower cost," Volkswagen said. "We see potential to use LFP for up to 30% of our battery electric vehicle portfolio." LFP costs significantly less to produce.

The driving range of LFP cars is lower, but they are popular in urban China, which dominates the EV battery supply chain. BMI estimates cathodes can contain between 0-15 kg of cobalt, 0-40 kg of nickel, and 30-50 kg of lithium.

One reason to cut cobalt content in EV batteries is cost - cobalt metal on the London Metal Exchange is trading at four-year highs around $71,000 a ton.

Also, 50% of the world's cobalt reserves are in the Democratic Republic of Congo where the potential for political instability and disruption is high. Congo currently produces more than 70% of the world's cobalt but some artisanal cobalt production poses reputational risk due to human rights abuses and the use of child labor.

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