Suppliers Have More Lithium Than EV Manufacturers Currently Need

Matt Posky
by Matt Posky
suppliers have more lithium than ev manufacturers currently need

The lithium industry — essential for the production of battery electric vehicles — has run into a problem. It’s currently amassing more of the metal than it needs. Despite automakers like Tesla suggesting there will be upcoming global shortages of metals like copper, nickel, and lithium, the only element that battery suppliers appear to be truly desperate for is cobalt, which is largely the fault of where and how it’s mined ( the Congo, often by children).

Demand for the brittle, bluish metal skyrocketed this year, but not lithium. The latter metal’s global supply currently exceeds demand by about 5 percent, according to data from Canaccord Genuity.

Reuters attributes the downfall in demand to electric vehicle sales in China. The People’s Republic has been doing most of the heavy lifting when it comes to EVs. Government programs have encouraged both the production and purchase of EVs, making it their most-viable market. But China has backed off the subsidies in recent months, hoping to allow electric startups and customer preferences to stand on their own two legs, or fall. While automakers stayed put, customers have been leaving in droves. EV sales fell by nearly a third in September, making it the segment’s third consecutive monthly decline.

Part of that is due to China’s souring economy, though the way the nation handled EV adoption also played a factor. Confusing emission laws, unevenly adopted between regions, spooked consumers away from the market. It’s also forced dealers to price less than predictably. A surplus of product forced heavy discounting over the summer, causing a momentary blip in sales. However, the country saw vehicle sales drop more than 12 percent in the first six months of 2019 and that looks to be the trend for the rest of this year.

From Reuters:

A global average of [lithium] prices is down more than 50 percent since the start of 2018, according to Benchmark Mineral Intelligence, a metals pricing provider that is hosting an EV supply chain conference this week in Los Angeles.

“Current market conditions are challenging,” Luke Kissam, Albemarle’s chief executive officer, said last week.

Despite the weak data, analysts and executives expect a rosy future when they look out 10 years.

Benchmark’s Simon Moores called the lithium oversupply an “air pocket that detracts from the building wall of demand,” and noted much of the excess white metal on the market is for so-called technical grade, or the kind that goes into smaller consumer electronics such as stopwatches.

Moores believes the high-grade lithium door will swing open in 2024, once more automakers begin manufacturing electric cars. Other analysts are less inclined to believe it’s smooth sailing from here.

“The future supply of battery-quality chemicals is very much in doubt,” worried Joe Lowry, an independent analyst, questioning the industry’s ability to produce over 800,000 metric tons by 2025 — twice its current capacity.

However, that’s a problem for tomorrow. Today’s lithium providers are trying to cut costs and appease investors hungry to make money off the popularization of EVs and rapidly-multiplying consumer electronics. This could create more issues down the road as today’s solution becomes tomorrow’s headache.

[Image: Sergii Chernov/Shutterstock]

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  • Pwrwrench Pwrwrench on Nov 14, 2019

    The lithium situation reminds me of the history of uranium in the USA. Most of the uranium for the Manhattan Project came from, what was then called, the Belgian Congo. The same area where cobalt and copper are found in great quantities today. After WWII the USA government policy was that having a domestic source of uranium was important for "national security". A much higher price was offered for uranium mined in the USA. Some people struck it rich, such as Charles Steen (who managed to lose his millions). Many uranium mines and refining mills were started. After about 20 years the government stopped paying the higher price for uranium and most of the mines closed when the price fell to world market. I suspect a similar story will play out with lithium. If the price gets "too" high, battery makers will find an alternative chemistry for their product. Lithium batteries were unknown 40 years ago. The recharagable battery then was the NiCad. Seen any of those lately?

    • See 1 previous
    • Pwrwrench Pwrwrench on Nov 15, 2019

      @Luke42 Quite accurate, Luke42. There are numerous uranium tailings dumped in areas that will leach into rivers and streams when it rains or snows melt. Some of the largest ones, such as the one near Moab, Utah, millions have been expended to dig up and truck/train the stuff some miles north. Supposedly out of the Colorado river watershed. However radium and uranium have flowed down the Colorado for more than 60 years. California's Imperial Valley, which is irrigated by the river, grows about 80% of the lettuce in the USA. It all has traces of radioactive metals. Grand Junction Colorado had buildings where the concrete aggregate came from uranium mine tailings. Including a bank and its vault. That was some hot money. Unfortunately it is more than a local problem.

  • Pwrwrench Pwrwrench on Nov 14, 2019

    BTW Most people throw lithium, and other batteries, in the trash. Regardless of any available recycling programs. The trash hauler here regularly sends out an email asking people not to throw their old phones, computers, cordless tools, and battery operated toys in the trash. The message includes some photos of trash trucks on fire. The description is that something with a lithium battery got into the truck and when the load was compressed it was crushed and ignited. Most people do not know or care if a device has a hazardous battery inside. To them it's now just a "brick" so in the trash, or out the car window, it goes.

  • Denis Jeep have other cars?!?
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  • Paul Mezhir As awful as the styling was on these cars, they were beautifully assembled and extremely well finished for the day. The doors closed solidly, the ride was extremely quiet and the absence of squeaks and rattles was commendable. As for styling? Everything's beautiful in it's own way.....except for the VI's proportions were just odd: the passenger compartment and wheelbase seemed to be way too short, especially compared to the VI sedan. Even the short-lived Town Coupe had much better proportions. None of the fox-body Lincolns could compare to the beautiful proportions of the Mark was the epitome of long, low, sleek and elegant. The proportions were just about perfect from every angle.
  • ToolGuy Silhouetting yourself on a ridge like that is an excellent way to get yourself shot ( Skylining)."Don't you know there's a special military operation on?"
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