EV Demand Makes Lithium Prices More Than Double in the Past Year

6 Oct 2021, 14:00 UTC · By Gustavo Henrique Ruffo

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INDUSTRY

In many European countries, customers are facing increasing prices for electricity. That would be a development of shutting down nuclear plants without making sure renewable sources of energy would be able to cope with demand. If that was not enough for EVs, lithium prices have almost doubled in the past year, which will make them more expensive.

According to Bloomberg, the price increase is directly connected with the demand for electric cars. Benchmark Mineral Intelligence (BMI) monitors the prices of the two primary sources for the metal: lithium carbonate and lithium hydroxide.

The consulting company said that the main issue is that demand is increasing, but lithium mines are still the same. All new companies announcing their plans to present electric cars are new buyers. Any carmaker that already sells EVs and introduces new ones is also driving production needs up. Simon Moores, BMI’s managing director, posted a thread on Twitter explaining the problem.

The main effect is that production cost parity with combustion-engined vehicles will be more challenging to achieve. Aware of that, automakers are getting involved with mining. In July 2019, Tesla, LGES, Volkswagen, CATL, and Daimler joined forces in a consortium in Indonesia to extract cobalt and nickel in that country.

It may sound like a coincidence, but BMW announced on October 6, 2021, that it is investing in a new lithium extraction process developed by Lilac Solutions. Through BMW i Ventures, the German carmaker expects to have access to lithium extracted from brine resources. Being natural saltwater deposits, they are also rich in the now crucial metal for batteries.

Many legal deadlines for these companies to kill the combustion engine are by the end of the decade. With time running out, more investments in lithium mines have to happen. Either that or car companies will shrink by offering only more expensive vehicles that a much lower number of customers will be able to afford. By suing car companies to urge them to adopt EVs, environmentalists may create a worse problem than the one they are trying to prevent.