Tight nickel supplies could haunt EV makers in the long term

Electric vehicle adoption could potentially be slowed by shortages of nickel and other metals used in vehicle batteries.
Electric vehicle adoption could potentially be slowed by shortages of nickel and other metals used in vehicle batteries. (Pixelbay)

Concerns that shortages of nickel could make it difficult to meet growing electric vehicle demand are not going away. A recent report on the site of Green Car Reports quoted sources from Bloomberg revealing that prices for class one nickel—high purity and required in some electric car batteries—has jumped more than 35 percent since the end of 2018 on the London Metal Exchange. 

The Bloomberg report, quoting Peter Bradford, chief executive officer of Australian nickel producer Independence Group NL, said that volume production of new EV models and plug-in hybrid vehicles will put further pressure on existing supplies of nickel.

Nickel is considered a key element in lithium batteries, because the metal is required to stabilize battery cathodes to enable the batteries to last longer and be less susceptible to thermal runaway, which could potentially lead to fires. In addition, nickel is used in nickel-metal-hydride batteries still used in many hybrid vehicles.  

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According to the Green Car Reports article, Bloomberg New Energy Finance forecasts nickel demand multiplying 16 times by 2030, with half of that expected to go into batteries.

"The dramatic price rise we’ve seen will pale into insignificance compared to the future,’’ Bradford was quoted as telling Bloomberg in the article.

The rising nickel prices obviously have electric vehicle makers worried. Tesla, for one, has expressed concern over rising prices for nickel, copper, lithium, and other metals. The automaker has been forced to communicate more with raw materials suppliers to ensure adequate supplies.

Green Car Reports also noted concerns over supplies of cobalt, another metal used to stabilize battery chemistry. Cobalt has historically been mined in the Democratic Republic of Congo, where concerns exist about child labor. This situation has forced automakers to seek development of socially responsible cobalt sources.

The long-term implications of nickel and other metals is likely to necessitate fundamental changes in the automotive supply chain. A McKinsey & Company report in April predicted the rapid uptake of EVs will see the emergence of a new supply chain connecting the largely previously unrelated industries of mining, battery manufacturing, and automotive. 

According to the McKinsey report, the global value of lithium, cobalt, and nickel for batteries is estimated at ~$5 billion, of which cobalt represents the largest share (~60 percent), followed by lithium (~30 percent), and high purity class 1 nickel suitable for batteries (~10 percent). At current market prices, the combined value of these commodities to meet battery demand is expected to reach $46 billion by 2025 and $134 billion by 2030.

The McKinsey report expressed concern that the future availability of both cobalt and nickel supplies would be crucial in determining battery capacity availability, and consequently, the rate of electric vehicle adoption.  

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