A GM employee sets an example of next-generation lithium metal batteries at the GM Chemical and Materials Systems Lab in Warren, Michigan, September 9, 2020.
Steve Fecht | General Motors | Handout | via Reuters
BEIJING – The growing demand for electric car batteries will push up the prices of key materials, Goldman Sachs analysts said in a March 18 note.
This in turn will increase the price of batteries by about 18%, which will affect the overall profits of electric car manufacturers, as the battery accounts for about 20% to 40% of vehicle costs, Goldman analysts said.
Although the report does not contain specific price targets for the commodities, the analyst model predicted that the return to historical peak prices would more than double the cost of lithium for electric battery manufacturers. The cost of cobalt would also double, while the cost of nickel would increase by 60%.
A new kind of battery
Limited availability of nickel suitable for car batteries can even accelerate a shift to another type of battery called lithium iron phosphate (LFP), the report said. Tesla and the Chinese new venture Xpeng are among the car manufacturers that already use these types of batteries, which do not use nickel or cobalt, but store relatively less energy.
If nickel prices reach a historic high of $ 50,000 per tonne, it could raise $ 1,250 to $ 1,500 per electric vehicle, which could hurt consumer demand for cars, analysts said.
Ultimately, the growth of the electric car industry and the demand for battery material depends on how many vehicles people buy. It is generally expected that the tipping point for consumers will generally switch from gas-powered vehicles to electric cars when battery costs have dropped sufficiently.
The shift could take place in the next decade. Goldman predicts that battery costs will be lower than those of internal combustion engines in 2030.