The evolution of electric cars is going through a decisive moment due to the recent nickel price increase, one of the essential metals for the manufacture of lithium-ion batteries. During March 2022, the value of nickel reached record levels in global markets, generating concern in the automotive industry and disrupting plans for the transition to electric mobility. In this article, we look at the causes of the increase, its impact on battery costs and the alternatives that are being explored to mitigate this challenge.
Why nickel is key in electric car batteries
Battery types and nickel composition
The batteries of lithium-ion have positioned themselves as the most efficient option for electric vehicles (EV) due to their high energy density. Within this group, there are several chemicals:
- NMC (Nickel Manganese Cobalt) BatteriesThe proportion of nickel may vary (for example, NMC 811 indicates 80 % nickel, 10 % manganese and 10 % cobalt).
- NCA (Nickel, Cobalt and Aluminum) Batteriesbalance high energy density with greater stability.
- Lithium-ferrophosphate batteries (LFP)without nickel, cobalt or manganese, with lower energy density but higher durability.
In addition, there are lithium polymer batteries and nickel-metal hydride batteries, mainly used in hybrids, as well as older technologies based on aluminum, sodium and zinc-air. However, the lithium-ion batteries with high nickel content (NMC and NCA) are preferred in EVs because of their balance between load capacity, performance and production costs.
Role of nickel in energy efficiency
The nickel is used in the cathode of NMC and NCA batteries for:
- Increasing energy densitymore energy stored per kilogram of battery.
- Improve fast charging capabilityfacilitates urban mobility and long-range travel with shorter recharging times.
- Reduce the presence of cobaltdisplacing this metal, which is more expensive and controversial due to its extraction problems.
However, this metal requires complex extraction and refining processes, which depend on global supply and geopolitical factors.
Rising nickel prices: causes and figures
Factors that led to the increase in March 2022
During March 2022, the nickel price on the London Metal Exchange (LME) reached 100,000 USD per metric ton, powered by:
- Geopolitical conflictsThe company's international supply was minimized by sanctions and embargoes on key suppliers.
- Growing demand for EVsThe following are some of the main reasons for this: automakers are projecting 80 % of new energy vehicle sales by 2025 (2025 GWM Strategy), increasing purchases of refined nickel.
Financial speculation: increase in investments in industrial metals as a refuge from market volatility.
Price comparison before and after
- By March 2022The nickel fluctuated between 15,000 and 20,000 USD per ton metric, allowing for more stable battery costs.
- March 2022peaks of up to 100 000 USD, more than 5 times the previous average value.
- Projectionsprice could return to the levels of 15,000 to 20,000 USD per ton in the medium term, provided supply normalizes and geopolitical uncertainty diminishes.
This drastic increase directly affects the cost of production of batteries, to the point that their value could double compared to the beginning of the year.
Implications for the automotive industry and consumers
Impact on battery cost and final price of EVs
Since the cost of the battery represents between 30 % and the 40 % of the price of an electric vehicle, an increase in the price of nickel implies:
- Higher production costThe price premium must be absorbed or passed on to consumers by the manufacturers.
- Delays in electrification projectsSome brands are reconsidering new EV model launches or adjusting manufacturing plans.
- Increase in final pricesConsumers will see higher figures at the time of quoting or buying an EV.
This temporal uncertainty makes it difficult to widespread adoption of electric vehicles in the short term, especially in price-sensitive markets such as Latin America.
Search for alternative suppliers and diversification of supplies
To mitigate the impact, automakers are:
- Exploring new depositscountries such as Indonesia, the Philippines and Canada are expanding nickel mining.
- Investing in battery recyclingNickel recovery from used batteries is strategic to ensure medium-term supply.
- Cathode diversificationresearch in LFP batteries (lithium-ferrophosphate) nickel-free, more economical and with a longer life cycle, although with lower energy density.
- Alliances with local suppliers: supply agreements with mining companies to guarantee more stable prices.
These strategies seek to prevent the nickel price variability production and make electric vehicles more expensive.
Alternatives to nickel batteries in EVs
Lithium-ferrophosphate batteries (LFP)
Batteries LFP have established themselves as a economic alternative:
- Stable chemistryLonger life cycle (up to 3,000 load cycles), lower flammability risk.
- Lower energy densityabout 10 % to 15 % less autonomy compared to NMC/NCA.
- Lower costsThe use of nickel and cobalt, which are no longer required, makes them dependent on lithium and iron, which are more abundant and more affordable.
Several manufacturers, especially in China, have launched EVs with LFP batteries, achieving more competitive final prices.
Solid state batteries and other emerging technologies
The next generation batteries promises to revolutionize the industry:
- Solid state batteries (ASSB)replace the liquid electrolyte with a solid electrolyte, increasing energy density and reducing the risk of thermal failure.
- Sodium-ion batteriessodium instead of lithium, taking advantage of the abundance of this element and lower extraction costs.
- Zinc-air batteriesThe following are some of the most important research projects in the world: researched for their high theoretical capacity and low cost, although they still face challenges of recharge and efficiency.
- Graphene and composite materialsThe aim is to accelerate loading and extend service life without relying so much on scarce metals.
Although these technologies are still in the development or prototype stage, they represent the future of electric mobility free of nickel volatility.
Outlook and recommendations for 2022
Nickel price stabilization forecasts
Specialized analysts estimate that, once the economic situation is back to normal, the supply chains and geopolitical uncertainty is reduced, nickel could back to its previous range (USD 15,000-20,000/tonne) towards mid to late 2022. However, the possibility of new fluctuations in the event of conflicts or changes in EV demand will remain latent.
Recommendations for consumers and manufacturers
For electric vehicle manufacturers:
- Diversify the supply chain with long-term contracts and recycling agreements.
- Research and adopt alternative batteries (LFP, solid state) by market segment.
- Maintain transparent communication with customers regarding possible price adjustments or delivery times.
For EV buyers and enthusiasts:
- Monitor battery prices and vehicle offers with temporary promotions before cost increases are passed on.
- Evaluate models with LFP batteries if the available autonomy meets your daily needs.
- Leverage government incentives and tax benefits that lower the total cost of ownership.
- Keeping informed on new battery technologies and EV launches that offer best cost-benefit ratio.
With this holistic view, both consumers and manufacturers will be able to navigating the volatility of the nickel market and make the right decisions when planning the transition to electric mobility.
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