Lithium has become 900% more expensive. It is bad news for the present (and future) of the electric car

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Lithium is not scarce on earth, but its production is. And that’s a real problem when we want to electrify most of the car industry. Its price has risen to levels unthinkable a few years ago. Worst? Forecasts are not too encouraging.

900%. It’s what you figure on Benchmark Minerall Intelligence growth in the price of lithium since January 2020. According to their market analyses, in just over two years the price of lithium has skyrocketed as a result of increased demand for electric vehicles and an unexpected drought in China that makes it clear the Asian dependence on the precious mineral.

The causes. From Benchmark they attribute this increase in the price to the greater demand for electric cars in the world market, whose sales continue to grow month after month, but also to one of the worst droughts in 60 years that China is experiencing. In fact, the Government has even forced companies to cease mining due to the low production of hydroelectric power that has been generated in recent months. One less hole in the belt of a market that is already tight enough.

There are no good forecasts. Benchmark points out that the situation is not going to change in the short term. His calculations indicate that the demand for lithium batteries will increase by 36% but that the production of the material will grow by 33%. Since the global supply of lithium is already insufficient, the numbers suggest that it will intensify soon.

At the same time, Europe is pushing for the car industry to switch to electric cars. From 2035 it will be prohibited to sell vehicles with a combustion engine (with rare exceptions) and, before that, the European emission regulations Euro 7 will put pressure so that the road is already trodden and electric or highly electrified cars are more than usual on our streets .

Creating problems in solutions. The global context is causing a fight to get enough lithium supply to increase the production of batteries and electric vehicles. Manufacturers are reaching important agreements to exclusively guarantee the lithium produced in some mines. Volkswagen and Mercedes have taken positions in Canada, where there is a large untapped source of the ore.

The problem according to cleantechnica and Benchmark is that these decisions do nothing but put more pressure on the market. The exclusive agreements reduce the supply of available lithium and, in addition, the new mines that are put into operation need between five and seven years to operate at full capacity. Some deadlines that have also been announced in the possible lithium mines that are installed in Extremadura.

not everyone sees it the same. In addition to benchmarking, Morgan Stanley It also pointed down this path in March, just before lithium reached its all-time high in April and shortly after nickel (another essential material in electric cars) came to suspend listing on the London Metal Exchange due to its exponential growth .

However, as pointed out by Juan Vázquez, doctorate in economics, the studies show different scenarios. Bank of America also warns of a lithium shortage for the next few years. City forecasts suggest that in 2025 the supply shortage will turn around. Goldman Sachs even advanced this situation to the next year 2023 in a report that has been answered since benchmark.

the usual. One way or another, it seems that the main affected will be, once again, the final consumer. The electric car has an important challenge ahead: motorize the entire population. Regardless of their income level, what in France they are thinking of alleviating with a renting of 100 euros/month for the most impoverished families.

Volkswagen intended to dominate the market with an electric car at 20,000 euros.  You already admit that it is impossible

The increase in costs, the shortage of chips, the Ukraine War and the shortage of lithium mines, added to the European obligations in terms of security, are increasing the prices of cars significantly. And yet, manufacturers do not lose money. On the contrary, they already know that even if they sell fewer units, they can increase profits. fewer engines available, more expensive cars and a commitment to subscription services. Having a car will be more expensive.

Lithium is not scarce on earth, but its production is. And that’s a real problem when we want to electrify…

Lithium is not scarce on earth, but its production is. And that’s a real problem when we want to electrify…

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