Ford Motor Company (NYSE: F), Tesla Motors, Inc. (NASDAQ: TSLA) – Nickel-grade EV battery, the conundrum of the automotive industry


According to an RBC Capital Markets report, the price of nickel has reached a seven-year high given the skyrocketing growth in demand for stainless steel, especially from factories. The week-to-week price from September for the precious metal jumped 1.5% to $ 9.04 a pound, while forex stocks fell 3.4%.

So, from an oversupply at the start of this year to a record price right now, EV battery grade nickel is becoming increasingly difficult and expensive to obtain, prompting electric car makers to give it a try. to take the supply chain upstream. What’s the prospect?

Nickel grade EV battery

Sales of electric vehicles are only increasing dramatically. Electric vehicle volume statistics establish that in the first half of 2021, more than 2.6 million new electric vehicles were sold, which is an increase of 168% compared to the same period last year.

“The recent increases speak of hyper-growth but must be considered against the low base of the first half of 2020”. During the 1st wave of the pandemic, global sales of electric vehicles remained -14% lower than the volumes of the first half of 2019, the automotive markets having fallen by -28% during the first half of 2020. “

Meanwhile, as electric car sales rebound and more EV battery grade nickel is needed,

China is pushing the price of the metal up.

As Oil Price reports, “Technical compression of SHFE and strong physical demand, manifested in increased imports, are supporting the price. In addition, state research house Antaike reported that the supply of refined nickel cathodes in the Asian giant fell 16% in July, compared with the same month last year.

Rising demand

From a macro perspective, the implementation of lower emissions regulations across the world – especially in Europe – is triggering massive production of electric vehicles, from auto giants like Ford Motor Company (NYSE: F) recently announced that they would invest more in electric cars than in ICEs in 2023.

Jason Sappor, commodities analyst at S&P Global Market Intelligence, said this would benefit demand for primary nickel, “and we also expect demand for battery grade nickel to increase.”

From this perspective, Market Intelligence analysts have launched an astonishing prediction that is sure to disrupt the nickel supply chain in the coming years. They say the annual nickel consumption of plug-in electric passenger vehicles could exceed 453,000 tonnes by 2025, up from 101,000 tonnes in 2020.

Few alternatives

Although cobalt – also used in the manufacture of EV batteries – is more expensive than nickel, the increase in the price of the latter – and yes, the environmental impact – is a cause for concern to the point that suppliers of the industry are looking for ways to get rid of it.

Gerbrand Ceder, a materials scientist at Lawrence Berkeley National Laboratory in Berkeley, Calif., Says, “We have solved the cobalt shortage, but because we are moving so quickly, we are heading straight for a nickel problem.

However, removing the nickel would mean a shift to drastically different crystal structures for cathode materials.

Movements of car manufacturers

Tesla Inc (NASDAQ: TSLA), the clear leader in electric vehicle manufacturing, quickly took the threat of nickel supply and announced a partnership with BHP Group Ltd (ASX: BHP) on July 22.

Tesla led global sales of electric vehicles in the first half of 2021 with 386,000 units, with VOLKSWAGEN GROUP Common Stock (ETR: VOW3) lagging behind with 332,100 units – 172,700 corresponding to battery electric vehicles and 159,400 to plug-in hybrid vehicles.

The BHP group is preparing to supply Tesla with nickel from the Nickel West mine in Australia, just after the automaker decided to meet part of its nickel needs from the Goro mine in New Caledonia.

The Market Intelligence report states that at that time, London Metal Exchange nickel stocks fell 6.7% “month over month, reaching 219,180 tonnes on July 23”.

SPG Global experts believe that China’s strong demand for nickel briquettes is behind the decline, as they are used to obtain the battery-grade nickel sulfate needed for electric vehicle batteries.

As nickel prices hit record highs, Chinese demand for primary nickel in rechargeable electric passenger vehicle batteries is expected to increase 84% between last year and this year.

Disclosure: No position


About Robert Pierson

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