The prices of nickel and cobalt, key raw materials for electric vehicle batteries, are soaring. This is because demand is rapidly increasing, mainly in countries where the corona spread trend has declined.
As the Chinese government is eager to increase the production capacity (CAPA and capacity) of CATL, the number one battery company in the country, it is leading the price increase in nickel and cobalt, raising concerns about a supply shortage.
According to the Korea Mineral Resources Corporation’s Resource Information Service on the 8th, the spot price of nickel on the day was $17,929 per ton (about 19.66 million won). This is an increase of 10.0% from the same day last month ($16,290, about 17.8 million won), and 29.3% from the same day last year ($13,860, about 15.2 million won).
Cobalt also shows a similar trend. Cobalt prices recorded 36,000 dollars per ton as of the 7th, up 12.6% from the same day last month (31,960 dollars, about 35.05 million won). Compared to the same day last year ($31,500, $34.45 million), it increased by 14.2%. In particular, in January this year, the upward curve has steepened.
The price of lithium, a core material, is also rising rapidly, drawing a jar curve. As of the 7th, it recorded 51.5 yuan (about 8,730 won) per kilogram (kg). This increased by 41.0% from the same day last month (36.5 yuan, about 6,190 won), and 30.3% from the same day last year (39.5 yuan, about 6,699 won).
The reason for the rise in prices is increased demand from China. Even during the coronavirus outbreak, the Chinese government was eager to supply and demand nickel and cobalt as’strategic minerals’. As China, a leading lithium producer, restricts exports, the price of lithium is also increasing.
The Chinese government plans to increase the proportion of eco-friendly car sales to 20% by 2025. This is why expectations are high for CATL, the number one company. CATL plans to gradually increase its battery capacity to 230 gigawatt hours (GWh) this year and 380 GWh next year to 1,200 GWh by 2025. On the other hand, the combined capacity of the three domestic companies is about 200GWh.
The Chinese electric vehicle market, which had been stagnant due to the spread of the corona, is also rebounding recently. According to market research firm SNE Research, CATL regained the No. 1 market share in the electric vehicle battery usage ranking from January to November last year. All three domestic companies also ranked in the top 5, but the wall of CATL, which is based on the large-scale domestic market, is still high.
The domestic battery industry is also paying close attention to this price situation. The problem is the supply and demand of nickel. Nickel plays a key role in increasing the energy density of batteries. Accordingly, the industry is focusing on high-nickel batteries that lower the proportion of cobalt, an expensive mineral, and increase the mileage by increasing the proportion of nickel.
LG Energy Solutions will supply NCMA (nickel, cobalt, manganese) batteries to customers from the second half of the year. According to the industry, this battery will be installed in Tesla’s’Model Y’. NCMA is a high-nickel NCM (nickel, cobalt, manganese) cathode material with aluminum added. The proportion of cobalt is lowered to 5% and the nickel content is increased to 90%, allowing more than 600 km (km) of driving on a single charge.
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Samsung SDI is also working hard on developing high-nickel NCA (nickel, cobalt, aluminum) cathode materials that have improved energy density by increasing the nickel content. It is planning to apply a high nickel NCA cathode material with an 88% nickel content in the next generation Gen 5 (5th generation) battery to be released this year. Considering the expansion of the mileage, it is particularly important to increase the proportion of nickel like NCA cathode materials.
High-nickel batteries are also different from the Chinese industry. High Nickel is still an unexplored market for the Chinese battery industry. CATL is focusing on developing lithium iron phosphate (LFP) batteries instead of high nickel. Lithium iron phosphate is known to have a lower fire risk because it is more resistant to impact and heat than NCM, but its energy density is lower than that of nickel. An industry official said, “If NCMA and NCA batteries become popular in the future, there is a possibility that the technology gap will widen further.”