Lithium producers are scrambling to produce enough lithium to meet EV makers’ demands. And they expect a shortage of supply.
Many countries all over the world are attempting to shift towards green energy, lower carbon emissions, and reduce dependence on oil and other fuel imports.
While the auto industry is a crucial part of the transformation, in recent times the demand in related manufacturing industries has increased. So far the chip shortage has halted various manufacturers from Stellantis to Nio in China.
Furthermore, Albemarle corporation and Livent Corp are two of the few producers who are working towards getting more lithium. Moreover, some analysts believe that the prices will increase with time.
Increase in prices
While manufacturing an EV, half costs tend to go towards the battery price. Hence companies have come up with battery swapping technologies to offer an affordable EV to consumers.
As the lithium providers try to meet up the demand, they may increase the prices. Leading to an increase in the price of the EV too.
While there are companies working towards other options like Solid State battery. But lithium has been at the core of the battery-making industry. Each global EV maker has goals to sell tens of thousands of EVs by 2025. Electric vehicles aren’t just about cars, but also trucks, bikes, and also three-wheelers.
Being the world’s largest lithium producer, Albemarle plans to double its production capacity to 175,000 tonnes. By the end of this year, their two construction projects are to be completed.
Already spent billions on manufacturing plants
General Motors, Ford, SK Innovation and LG energy has been working on building manufacturing plants in the US. And the US government has proposed spending $174 billion on the sales and infrastructure of EVs.
Preparing for mass production while the battery costs could increase may not get along. Currently, lithium prices have risen up to 59% since last year.
As said by the chief executive of livens corp, Paul Graves, “The rising demand reflects what feels like a feel and fundamental turning point in our industry.”
Furthermore, he added, “It will be a challenge for the lithium industry to produce sufficient qualified material in the near and medium-term.”
Furthermore, Australia-based Orocobre is paying for a smaller Galaxy Resources by laying $1.4 billion.
And an independent lithium industry consultant, Chris Berry,
“The next few years are going to be critical in terms of whether there’s enough available lithium supply, and that’s why you’re starting to see commodity prices start to ramp.”
Raise in demand
The forecasts say that the demand for white metals will rise from 320,000 to 1 million tonnes annually by 2025. Also, the need to increase prices comes along to encourage producers to manufacture more for tomorrow (by 2025).
As said by Pedro Palandrani from Global X Lithium & Battery technology,
“Companies across the lithium-ion supply chain are in the best position they’ve been in for the last 5 years.”