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Electric automakers must brace for rising battery materials costs, Goldman says

TUE, MAR 23 20219:17 PM EDT

Evelyn Cheng@CHENGEVELYN

KEY POINTS
  • Growing demand for electric car batteries will cause prices of the main materials to surge, Goldman Sachs analysts said in a March 18 note.
  • That in turn will drive prices of batteries higher by about 18%, affecting the total profit of electric car makers, the Goldman analysts said.
  • Limited availability of nickel suitable for car batteries could even accelerate a shift to another kind of battery called lithium iron phosphate (LFP), the report said.
BEIJING — Growing demand for electric car batteries will cause prices of the main materials to surge, Goldman Sachs analysts said in a March 18 note.

That in turn will drive prices of batteries higher by about 18%, affecting the total profit of electric car makers since the battery accounts for about 20% to 40% of the vehicle cost, the Goldman analysts said.

While the report didn’t give specific price targets for the commodities, the analysts’ model predicted a return to historical peak prices would more than double the cost of lithium for electric battery makers. That of cobalt would also double, while the cost of nickel would rise by 60%.

“Prices for the three main natural resources have been rising since the start of 2021,” the Goldman report said. “We believe that in order to promote sustainable EV industries, some countries may consider implementing policies to increase national stockpiles.”

A new type of battery
Limited availability of nickel suitable for car batteries could even accelerate a shift to another kind of battery called lithium iron phosphate (LFP), the report said. Tesla and Chinese start-up Xpeng are among automakers already using this type of battery, which does not use nickel or cobalt but stores relatively less energy.

If nickel prices hit their historic high of $50,000 per tonne, that could add $1,250 to $1,500 per electric vehicle, which could hurt consumer demand for the cars, the analysts said.

Ultimately, the growth of the electric car industry and demand for battery materials depends on how many vehicles people buy. The tipping point for consumers broadly to switch from gas-powered vehicles to electric cars is generally expected to come when the battery cost has fallen sufficiently.

That shift could happen in the next decade. Goldman predicts battery costs will drop below that of internal combustion engines in 2030.
 

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Surprise, surprise, surprise................ NOT

Econ 101; Supply & Demand

No worries, I'm sure electricity cost will soon be almost free, with the increases in demand.............
 

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Surprise, surprise, surprise................ NOT

Econ 101; Supply & Demand

No worries, I'm sure electricity cost will soon be almost free, with the increases in demand.............
That the Central Planners, approximately zero percent of whom have ever worked in the private sector, had to make payroll or a real budget (not an imaginary-dollars federal budget) or payroll, understand supply and demand and market, and will suffer ZERO personal consequences for their brilliant folly, think they can manage the markets out to 2035 is a Shakespearian tragi-comedy.

They cannot even fix the electric grid vulnerabilities to sabotage, foreign attack, natural disaster, or sunspot EMP activity despite having full knowledge for about 20 years, tells you all you need to know about their competence.
A massive grid failure, intentional or natural-events caused, could result in the fall of our nation (how's 80% of the population dead within 90 days sound?), therefore of Western Civilization, BTW to include the demise of 99% of the genius Central Planners (who in the Soviet Union had disaster after disaster after disaster of unsuccessful10-year-plans) does not stop the New Generation of high-IQ/low intelligence amateurs. All of whom are the smartest person in the room.

If any of them are around for the next crash-and-burn, will they stand around scratching their asses, finally taking responsibility? NYETski. They will plan further disasters to fix the ones they just created. As Einstein noted about infinity, the universe, and human stupidity...look it up.

The short-term increase in material costs is, of course, quite real.

The long-term prediction that battery costs will fall below that of ICEs in 8-9 years is wild speculation, unsupported by real world example.
The Smartest People In The Room. Almost never right.
 

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A new type of battery
Limited availability of nickel suitable for car batteries could even accelerate a shift to another kind of battery called lithium iron phosphate (LFP), the report said.
Thanks for this article Ed753!

Though the CNBC article suggests that LFP chemistry is "new", its history goes actually goes back 25 years. Dr. John Goodenough, who won the 2019 Nobel Prize in Chemistry, proposed LFP as a cathode material for lithium ion batteries in 1996.
 

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Anything other than down spells BIG trouble for EVs.
 

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Anything other than down spells BIG trouble for EVs.
According to some people (some on this site) EVs are a done deal whether you like it or not. So it's not trouble for EVs, it's trouble for the consumers and users = all of us.
 

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Surprise, surprise, surprise................ NOT

Econ 101; Supply & Demand

No worries, I'm sure electricity cost will soon be almost free, with the increases in demand.............
Yes.
Why do you think Tesla has been attempting to corner the market in raw materials for the past couple years?
Or why Elon Musk put the word out that he wanted to invest in nickel mining directly. I believe he recently announced a technical partnership with a mine too.

I'm sure other manufacturers are doing the same thing.... just not as publicly as Musk did.
 

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Still won't stop me from buying a Model 3 Performance as my next car.

After getting to know the 3 while I was in LA for quite some time last year, no car really even comes close. I personally wouldn't care if gas powered cars were discontinued permanently tomorrow. That's how good an electric car can be.
 

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Thanks for this article Ed753!

Though the CNBC article suggests that LFP chemistry is "new", its history goes actually goes back 25 years. Dr. John Goodenough, who won the 2019 Nobel Prize in Chemistry, proposed LFP as a cathode material for lithium ion batteries in 1996.
Right. The problem with LFPs have been lower energy density but looks like it's gotten good enough now that "standard range" variants of vehicles designed to accommodate bigger batteries for "long range" versions can get by with LFP now.
 
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Thinking about it more, To be 100% honest, I can get by with an EV that gets roughly 180mi range...enough for 2 round trips to/from the office. Such an EV right now in 2021 satisfies 100% of my use cases with my Mazda. For long distance road trips or weekend cruises to the Redneck Rivera, that would be where the Buick or Dodge comes in handy. If such a short range midsize sedan EV, non econobox looking, existed today for 35-40k...I'd go for it in a heartbeat.
 

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Thinking about it more, To be 100% honest, I can get by with an EV that gets roughly 180mi range...enough for 2 round trips to/from the office. Such an EV right now in 2021 satisfies 100% of my use cases with my Mazda. For long distance road trips or weekend cruises to the Redneck Rivera, that would be where the Buick or Dodge comes in handy. If such a short range midsize sedan EV, non econobox looking, existed today for 35-40k...I'd go for it in a heartbeat.
Actually that wouldn't be too bad to just use the electric in that manner and for other things there would be the ICE one still has if that be your situation. I have to say something like that would make me think a bit, except for impromptu days off from work spent tooling about and not showing up back home til later in the day ;) range might be an issue...maybe? :)
 

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This is all analogous to the great promise of the New Green Deal which is said to create so many jobs. Problem is there will be a lot more people needed to work to create the same amount of electricity as we have now meaning we'll all pay a lot more per kwh we use. That's one fact the promoters of green energy don't talk about. Same as these materials involved in battery manufacturing. The marginal cost to get marginally more nickel and other materials is MORE not less. Get out your wallets everyone.

Last words: I love electric cars ... for a lot of reasons. But I'm not stupid about the economics associated with them.
 

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Actually that wouldn't be too bad to just use the electric in that manner and for other things there would be the ICE one still has if that be your situation. I have to say something like that would make me think a bit, except for impromptu days off from work spent tooling about and not showing up back home til later in the day ;) range might be an issue...maybe? :)
Ha...I felt guilty thinking I was the only guy that took secret days off to get away. Yeah it would be hella awkward to run out of juice at the movie theatre or shooting range when the Mrs thinks you're at the office.

Hell nowadays I use the old "I have to go into the office" excuse to steal a day.
 

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Prices of everything are going through the roof right now and some things you can't even find.

I've needed a new screen for my daughter's laptop for months and they still can't get the part.
 

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Of course that's going to happen. When you consider the countries that hate us have the most raw materials the eventual result is pretty obvious.

People see this nice clean quiet car go by and just see the end result but they have no idea as to the environmental cost both short term and long term.

Sorry for the facebook video but that's where it was linked for me. I don't do FB and I was able to watch it.
 

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Discussion Starter #19
Thinking about it more, To be 100% honest, I can get by with an EV that gets roughly 180mi range...enough for 2 round trips to/from the office. Such an EV right now in 2021 satisfies 100% of my use cases with my Mazda. For long distance road trips or weekend cruises to the Redneck Rivera, that would be where the Buick or Dodge comes in handy. If such a short range midsize sedan EV, non econobox looking, existed today for 35-40k...I'd go for it in a heartbeat.
What was the MSRP and how much did you pay for your Mazda

Goldman Sachs has been pretty wildly wrong in the past too.
Is Goldman Sachs always wrong?
 

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What was the MSRP and how much did you pay for your Mazda



Is Goldman Sachs always wrong?
33 MSRP, 27 OTD, I'd pay an extra 8 grand for a short range midsize EV...That's pretty close to cost neutral IMO. 80mi / day $2.50 a gallon @ 29mpg avg, 5 days a week, 52 weeks a year, carry the 1 and it'll pay for itself in somewhere around 5 years maybe less if gas goes up.
 
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