Battery Materials Prices Plummet, Cheaper EVs Soon. Press – “Why That’s Bad for Biden”

As I’ve recently posted, promising signs we will see sub-25k priced EVs in the coming year.

One big reason? Battery prices dropping precipitously.
Underlying that, lithium prices that had been skyrocketing, have collapsed.

Media response? Why that’s “bad news for Biden.”

WSJ:

America’s transition to electric vehicles is running into an unexpected snarl.

A surprising crash in prices for lithium, cobalt and other metals used in EV batteries is hitting mining companies, which are suspending or delaying new projects and expansions. The disruptions are threatening to deepen shortages of those materials in coming years and hit the brakes on the Biden administration’s timeline for weaning the country off gas-powered cars.

“This situation is a bit dangerous because the mines aren’t going to get built,” said Anthony Milewski, chief executive of nickel producer Nickel 28, who is a longtime investor in battery metals. “We should be building those mines now and we’re not.” 

An absolutely bonkers example of the bad-news bias (and a failure to take Econ 101) in econ reporting: The @WSJ observes that the price of metals used in electric vehicles are crashing, and somehow infers that it will create shortages and snarl adoption of EV's. pic.twitter.com/nG9eM8EEP6

— Justin Wolfers (@JustinWolfers) November 21, 2023

Battery-grade lithium prices are down more than 60% this year, while nickel, graphite and cobalt have lost about 30%, according to Benchmark Mineral Intelligence. A big factor behind the declines: a weaker-than-expected economic recovery after Covid-19 lockdowns in China, the world’s largest consumer of metals. 

The sliding prices mark a turnaround from when carmakers rolled out ambitious plans to switch their fleets to EVs and metal prices rocketed higher in what many analysts believed would be a yearslong supercycle. 

The enthusiasm reflected the huge potential for growth: Electric vehicles accounted for 8% of U.S. auto sales in the third quarter, according to Cox Automotive. The Biden administration has said it wants half of all new vehicle sales to be electric by 2030. This year’s plunge in metal prices shows getting there won’t be a smooth ride.

Mines can take years between discovery of a metal and production, meaning the slowdowns could result in material shortages in coming years and leave carmakers scrambling for scarce supplies. 

Already, mining projects have struggled to gain traction after facing local opposition, environmental concerns, red tape and other obstacles. 

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For now, lithium supply and demand are relatively balanced. But by 2030, demand for the metal is expected to more than triple to 3.1 million metric tons and outpace supply by nearly 400,000 tons, according to Benchmark estimates. Cobalt and nickel are also expected to be in short supply.  

Not all mining companies are worried about falling prices, given the volatile nature of commodity prices. Surging prices a couple of years ago caused producers to flood the market with supply, leading to a short-term glut in some materials that subsequently pushed prices down.

Australian Financial Review:

Prices for key battery metals required for the clean energy transition – such as lithium and nickel – have collapsed since the start of the year amid a supply glut and Chinese consumers reducing demand for electric vehicles.

The price of lithium, Australia’s sixth most valuable mining export, has fallen 30 per cent in a fortnight and has plunged 63 per cent since the start of the year.

The collapse in price prompted Rio Tinto to hint earlier this week that the three-year boom in lithium prices could be coming to an end. But the mining giant is still betting predicted supply shortages will ensure strong “market fundamentals” for the battery mineral longer term.

Australia’s billionaire mining magnates appear to agree. Despite the collapse in price, The richest Australian, Gina Rinehart, and billionaire lithium mining pioneer, Chris Ellison, are buying up the country’s battery-metal assets.

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Hot take:

In the early 2000-teens, the price of solar panels collapsed. Some manufacturers went out of business.
Those that weathered the storm continue to prosper today, as even more price drops continue.
Prediction: New technologies for extracting and recycling Lithium will continue to keep prices low, even as the EV industry ramps up.