As oil prices reach record high levels, the prices of commodities have also been vulnerable. In a historic event, the price of nickel doubled to $100,000 per tonne on March 5, and the London Metal Exchange (LME) suspended trading for the day. Russia, a major supplier of nickel, has been hit with extensive sanctions over its invasion of Ukraine.
As a result, the supply of the metal from the country are dwindling. This can put EV makers in a spot as nickel is a crucial component of lithium-ion batteries that are used in EVs.
Russia supplies about 6 percent of the world’s nickel, according to The Wall Street Journal and it plays a crucial role in supplying battery-grade nickel used in EV manufacturing. In a Twitter thread, the CEO of Benchmark Mineral Intelligence wrote that 20 percent of that supply comes from a single Russian company, as reported by The Verge.
Morgan Stanley auto analyst Adam Jonas has also raised concerns in a published note, “As of this writing, nickel is up 67.2 percent just today, representing around a $1,000 increase in the input cost of an average EV in the U.S” he wrote, according to a CNBC report.
Nickel is a critical ingredient in the lithium-ion battery cells where it is used in the cathodes. Most vehicles sold worldwide use similar battery technology and the rising prices will lead to a surge in the prices of EVs. Affordability is already an issue and the rising cost of energy is adding to the pressure.
Last year, even Tesla’s Elon Musk highlighted the importance of nickel and raised concerns over its shortage. He tweeted, “Nickel is our biggest concern for scaling lithium-ion cell production.”
However, it is possible to make EV batteries without nickel. Volkswagen and other automakers are looking to develop alternate technologies that use cobalt instead of nickel. But the price of cobalt has also been on the rise, according to Reuters.
As the industry faces a crunch, it is most likely to innovate its way out of it and develop alternate technologies to continue the production of EVs. However, the current scenario can put the EVs out of the reach of aspiring buyers.
