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January 19, 2024

Lithium lull makes nickel top priority for US battery OEMs despite difficult sourcing environment

Battery Raw Materials Forecast 2024-2030

Battery raw material prices have fallen off a cliff following subdued Chinese demand.  Adjustments in the country’s electric vehicle subsidies, coupled with extensive stockpiling, has seen the price of battery-grade lithium slashed by over 80%, with the prices of battery-grade nickel and cobalt products also dropping significantly.

Pack prices will continue to fall until 2026 or so, as raw material costs remain deflated and Chinese production continues to outpace Western efforts to develop a significant manufacturing base for automotive batteries.

Policy will continue to be a key factor in determining raw material prices, with the Inflation Reduction Act creating parallel markets for high-cost chemicals like lithium salts and nickel sulfate, as companies fight over the limited supply of compliant materials. This will allow producers to charge more for their product for an extended period, even during times of relative oversupply in the wider market for materials – as will be seen in the nickel markets, with nickel demand set to boom as battery demand increases.

Low prices pose a risk to the future supply landscape.  However, keeping supply chains simple – through strategic choices in battery chemistry – will pay dividends, as value becomes increasingly focused on non-substitutable raw materials like lithium.  This will make it easier for companies to maintain eligibility for IRA subsidies, further improving competitiveness, profitability, and therefore market share.

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Rethink Energy Research

Rethink Energy forecasts the changing energy landscape and its investment possibilities, as renewables begin to take over from conventional fossil fuels