I'm looking for an explanation in the lithium spot price and why battery supply is so different across regional markets.
The spot price has hit a two year low in China suggesting a demand that is slower than expected in the Chinese EV market. There is over supply of lithium and batteries for EVs made in China.
In the US, Tesla, the largest EV manufacture complains about a shortage of batteries. They have to take from Paul to pay Peter and the remainder goes to MegaPack production (limiting it). It looks like much of the 4680 production has gone to the CyberTruck at the expense of other models. Tesla do not have enough US battery production and they have to minimise the use of Chinese made batteries.
European and US (excluding Tesla) EV manufacturers have not built compelling products for sale anywhere in the world, creating less demand for batteries. Many are reducing EV production and delaying battery plants.
At the moment, it seems to me, that the only competent EV manufactures, that are capable of driving up demand for lithium, are the Chinese and Tesla. Companies that started from the ground up or don't have the same baggage that legacy manufacturers inherited.
Has the IRA broken the global battery market? US EV manufacturers have to use US manufactured batteries to be competitive, but the supply is limited, the cost to manufacture is higher even thought the raw materials costs have decreased and it takes years to build new plants or even ramp existing production.
AKE Price at posting:
$11.15 Sentiment: Buy Disclosure: Held
