Just saw a Tesla fan article. In the article they noted that there were a flurry of patents from Tesla and they speculated that the technology would drop the price of batteries by about half.
So, went looking for charts of battery prices. It looks like the cost to manufacture li-ion cells has stalled at a out 130 dollars a kilowatt hour. In fact the price of li-ion batteries has increased in 2022. So, I took a look at the input costs for li-ion batteries. With just a few minutes of research I decided a rough guess of the cost of a lithium in a li-ion battery is around 30 percent. This is eye opening.
The cost of lithium has gone up about 6 times in the last year or so.
With these increases, battery prices should have doubled, not gone up 10 to 20 percent as they did. A couple of things about lithium. Only in the last year or so has there been a futures market in lithium. This has allowed speculators to drive a huge increase in the cost of lithium. As lithium is not that rare, I would expect the prices to drop to some level well below the current price. “The cure for high prices is high prices”
Even with these high prices for lithium there is speculation that Tesla can drop prices well below 100 dollars a kilowatt hour. With a drop in lithium prices we can see that drop even further. If, big if, the price of lithium is currently in a speculative bubble, we can expect the price of lithium to drop very quickly and even without new super duper Tesla technology, we can expect li-ion battery manufacturing cost to drop well below 100 dollars a kilowatt hour soon. (Soon is a tricky word)
Note: These are the cost of batteries to the manufacture and do not reflect the market price of a battery that a consumer might pay. Last time I checked even the lower cost LFP installed at a home was around 800 dollars a kilowatt hour.
Yes, Tesla and others have been complaining about the skyrocketing price of lithium. And companies everywhere are increasing production capacity. That include Chili, Argentina, Australia and in the US Salton Sea, Great Salt lake, Arkansas, and North Carolina. And no doubt Canada and Africa too.
Lithium demand is increasing and the industry is expanding to supply. But its likely to be a few years before all this new construction is ready.
You wonder if there will be a lithium “association” similar to Opec to ration supply and control prices.
“Around 35 gigaplants are built or under construction in the EU. A Faraday Institution report in 2022 projected over 1100GWh per year of battery production capacity in Europe by 2030, with over 40 factories expected to be operational by then. This projection has more than doubled since the institution’s previous report in 2020. It pointed to Germany as a leading location – with 12 gigafactories open or planned”
Are those EV gigafactories or battery factories.
You wonder if some over building might be going on.
London-headquartered Arrival began building electric vans at a facility in Oxfordshire in 2022; last October it revealed that it would refocus attention towards the US market, encouraged by subsidies available through President Biden’s Inflation Reduction Act, and open a factory in North Carolina. The firm recently told investors it would halve its global workforce to 800 employees to save on costs…
‘If you look at China, they have been subsidising battery making for a very long time,’ says Wu. And the US Inflation Reduction Act enacted in 2022 offers billions of dollars in tax credits to electric vehicles in the US – but only if 40% of their components by value are extracted or processed in the US, or trade partners, by 2024. This figure rises to 80% by 2027.
In the EU, the European Battery Alliance launched in 2017 aims to make Europe a global leader in batteries. The European commission began consultating on relaxing state aid rules in February, partly in response to the US legislation. ‘The US intervention is a game changer,’ says Steinberger-Wilckens…
For the UK, demand is forecasted at 100 GWh of batteries per year by 2040, requiring around ten gigafactories, according to the Faraday report. Of that, only 1.9 GWh/yr of capacity is currently operational – run by Envision AESC and supplying Nissan’s Sunderland car plant. Nissan and Envision AESC have agreed to build a second, 11 GWh/yr plant in Sunderland, which is due to be completed in 2024 and could potentially expand to produce 25 GWh/yr by 2040.
Volkswagen, Europe’s biggest car maker, is holding off on plans to build a battery factory in Eastern Europe as it awaits Europe’s response to the incentives U.S. President Joe Biden is offering to companies making batteries in America.
The company may decide to prioritize a factory in North America where it could benefit from $10 billion in subsidies. The European Union is considering offering other incentives to keep production on the continent.
“We are still evaluating suitable locations for our next cell factories in Eastern Europe and North America,” a Volkswagen spokesperson said. “No decisions have been made yet. We stick to our plan to build cell factories for about 240 GWh in Europe by 2030, but for this we need competitive framework conditions.”