A GM employee is an example of a next-generation lithium metal battery company at the GM Chemical and Materials Systems Lab in Warren, Michigan, on September 9, 2020.
Steve Fecht | General Motors Material via Reuters
BEIJING – Growing demand for electric car batteries will cause prices of major materials to rise, Goldman Sachs analysts said in a March 18 note.
This in turn will increase battery prices 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 did not give specific target prices for goods, the analyst model predicts a return to historical peak prices more than doubling the cost of lithium for electric battery manufacturers. Cobalt would also double, while the price of nickel would rise by 60%.
The limited availability of nickel suitable for car batteries could even speed up the transition to another type of battery called lithium-iron-phosphate (LFP), the report said. Tesla and a Chinese start-up Xpeng are among car manufacturers that already use this type of battery, which does not use nickel or cobalt, but stores relatively less energy.
If nickel prices reach their all-time high of $ 50,000 per tonne, it could add $ 1,250 to $ 1,500 per electric vehicle, which could hurt customer demand for cars, analysts said.
Finally, the growth of the electric car industry and the demand for battery materials depends on how many vehicles people buy. It is generally expected that the milestone for consumers to switch from gas-powered vehicles to electric cars will come when battery costs fall sufficiently.
That shift could happen in the next decade. Goldman predicts that battery costs will fall below the cost of internal combustion engines in 2030.