Compilation / Ma Xiaolei
Edited / Tu Yanping
Design / Leather
Source/CNBC By John Rosevear
Elon Musk, as always, is surprising, calling on the world to drill for more oil and gas.
This kind of statement from Musk is really surprising. To keep the world away from oil and gas, the way he tried to stay in people's minds, many people began to criticize him as anti-clean energy.
In fact, Musk's move is understandable. The situation in Russia and Ukraine has led to a spike in the price of oil and gas, and the foreseeable global shortage should be brought to the attention of the people.
However, in addition to being a big producer of oil and gas, Russia is also the third largest producer of nickel in the world. Musk should be more worried about nickel, because now the price of nickel is soaring.
The price of nickel per ton had more than doubled before the outbreak of the Russian-Ukrainian conflict last year, but it has risen by more than 80% in the past month, and jumped sharply on March 7.
Adam Jonas, an auto analyst at Morgan Stanley, wrote in a March 7 note: "The price of nickel metal has risen by 67.2 percent in just one day today, meaning the average cost per electric vehicle in the U.S. has increased by $1,000." ”
Today, the price of nickel has reached $100,000/ton, and the London Exchange had to suspend nickel trading on March 8, a rare wave of operations.
Musk proposed in 2020 that nickel ore needs to increase production. Tesla has signed an offtake agreement with metal company Talon Metal, which is about to build a new nickel mine in the United States and is the first to supply Tesla's battery production.
Most electric vehicles in the U.S. market use lithium-ion batteries, and nickel is a key raw material for lithium-ion batteries. The sudden price increase has left analysts and investors sweating for the car company's grand electric vehicle project.
Currently, only about 5% of the world's nickel supply is used for batteries for electric vehicles, and it is expected that nickel demand for electric vehicles will jump from 5% to 59% of the entire nickel supply by 2030.
This means that if production is not significantly increased as soon as possible, nickel supply may be cut off in the near future. Jonas even suggested that investors lower their expectations for automaker revenue and electric vehicle sales in the coming years.
Why is nickel so important?
The cathode of lithium-ion batteries in electric vehicles consists of lithium mixed with metals such as nickel, cobalt, manganese or aluminum. The higher the nickel content of the cathode, the greater the energy density of the battery, and the subtext is that the greater the range generated by the battery per unit weight.
Some older batteries have a nickel content of one-third of the cathode. In recent years, the nickel content of the cathode of some batteries has reached 60%, or even higher. Some of the nickel content in the cathode is to remove cobalt, and some to further increase the energy density and supply some specific models. For example, South Korean battery manufacturer LG Chem supplies Tesla with a nickel content of up to 90% in the cathode of the battery cell.
High-nickel batteries offer certain advantages for electric vehicles, and industry experts have long been worried that the increase in global electric vehicle production may bring about a shortage of nickel.
Analysts at Rystad Energy warned last fall that the high-ice nickel needed for electric vehicle batteries could be out of supply in 2024. Other analysts, including those at Morgan Stanley, have issued similar warnings.
Automakers have also signaled that high-nickel batteries may only be available for specific models, either for models with higher energy density requirements, such as heavy-duty trucks, or luxury cars that will use high-nickel batteries as the main selling point.
Assuming that the price of nickel continues to rise, the cost of electric vehicles will soon rise, especially high-end electric vehicles.
For those automakers who do not buy enough nickel metal before the price increase, there are only two ways in front of them: 1. Bear it yourself, that is, earn less; 2. Consumers bear it, that is, increase the price. Most manufacturers will probably opt for a two-pronged approach.
For low-cost models in the mass market, this issue is less important.
The Tesla Model 3 in the Chinese market uses lithium iron phosphate batteries in the Ningde era, and the cathode of this battery uses iron phosphate, no nickel and no cobalt, so there is no need to worry about the rise in nickel prices.
Lithium iron phosphate batteries cost less than lithium-ion batteries, but their energy density is also lower, so to achieve the same level of endurance as lithium-ion batteries, its weight will be greater.
Because battery weight increases can limit vehicle performance and may affect vehicle handling, this battery is not ideal for high-end cars.
Last fall, Tesla began using lithium iron phosphate batteries in its entry-level models, and the industry generally believed that Tesla was designed to reduce the production cost of these models, or in other words, to improve the profit margins of these entry-level models without price increases.
Now, as nickel prices soar, there are likely to be a number of major global automakers following Tesla's lead.