With Cost Of Cobalt Rising, EV Prices May Increase…Or They Might Not

MAY 21 2017 BY MARK KANE 18

Tesla 2170 Cells

Nikkei reports a high increase in lithium-ion battery making materials such as lithium (go figure) and also cobalt over the past few years, which now could apparently affect battery cell pricing, and in turn, the pricing of EVs themselves.

Cobalt has surged a couple times over the past ~twelve months.

International price of cobalt (source: Nikkei)

Now, to be fair, not all kinds of lithium-ion battery cells use cobalt, but those which do are also common inside some of the most popular models (Tesla/Panasonic uses cobalt electrodes).

“The international price of cobalt, a material used in rechargeable lithium ion batteries, rose to an eight-year high of around $27.50 per pound in mid-April, a 90% increase since the beginning of the year and 2.5 times greater than a year ago. Cobalt is “being bought on the anticipation of increasing demand for use in electric vehicles,” according to an official at a major trading house.”

“Cobalt is a byproduct of nickel and copper, but supply is falling as mining companies roll back production due to a sluggish copper market and stronger environmental regulations. Some are also worried about instability in the Democratic Republic of the Congo, which is a major producer of cobalt.”

Separately lithium also is becoming more expensive. Prices are three times higher than two years ago in China (“international benchmark for the metal”).

When material costs goes up, it’s harder to achieve battery price cuts, but fortunately material costs still only a fraction of the entire equation. So at least for now, adding a couple hundred bucks to battery costs are still offset by a lot of other factors.

source: Nikkei

Categories: General


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18 Comments on "With Cost Of Cobalt Rising, EV Prices May Increase…Or They Might Not"

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Any plot that the has the Y axis not starting at 0 should be looked at with extreme skepticism.

No, you should read the axis numbers to evaluate the data.
I have seen some graphs without any label on the y-axis and they should be ignored.

That was a lesson my aunt taught me; that any graph that has the zero line (baseline) cut off is quite deceptive, often intentionally so. At the very least, such a graph lacks perspective.

She had a science PhD and was involved in active research; I rather doubt she would have made an issue of it if it wasn’t an important subject!


“Any plot that the has the Y axis not starting at 0 should be looked at with extreme skepticism.”

…says the guy who never had to quickly and clearly chart trends for Corporate or scientific teams.

The reality is that most organizations in fact PRESCRIBE that the ordinate (“y axis”) range is about 130% of the data range. This is especially important in examining data whose trends are meaningful but not readily visible with a “start at 0” approach. Ever read a scientific paper at all?

An example is something close to the hearts of Insideev readers is climate data. Charts for Avg Temperatures or Ice Extent are virtually never a “complete” ordinate range because the data trends are hard to see.

BTW: The “Deniers” say exactly what you are saying: why don’t you show the Sea Ice Extent ranging from zero rather than this, a data presentation from the National Snow and Ice Data Center:

The reality is that somewhere in the next 24 hours in a planning meeting about material costs, charts like the Co price chart are being used because the presenter is applying the data presentation rules his/her organization demands.

And that still makes it oversimplifications and misrepresentation.

And if you just can’t stand my version, here’s another:


Doesn’t the Bolt use a battery without cobalt?

No, the Bolt uses NMC chemistry, which has cobalt in it. Tesla’s also have cobalt, but use a lot less per kWh since they use NCA chemistry in the vehicles.

But the amount of cobalt we’re talking about is pretty small per vehicle. So doubling the cost of cobalt would increase the material cost by roughly $300-400 in a Model S. More in a Bolt.

This price increase right now is likely driven by speculators buying up cobalt to try to sell it later at a higher price. But most of the big manufacturers have long term supply contracts.

If the price remains this high, several cobalt mines might have a chance at starting up. We’re just getting back to 2010/2011 pricing.

There is no high density Li-Ion technology without cobalt, except lab experiments that may or may not go into production and reach automotive level prices a decade later. Buses and yard trucks may use LiFePo, but its density too low for pure battery cars.

60-100 kW NCA battery may need in ballpark of 10 kg elementary Cobalt, NMC a bit more. So current prices isn’t a big deal yet. But they may go up to any point, and as such limit BEV production to few millions per year maximum, as part of the 120 ton/year cobalt production is already used in much less price sensitive industries. That is if you believe there will be high demand for BEV batteries soon.

All the cobalt reserves you may hear about are irrelevant, 95% are tied with copper or nickel and would not result in mines until cobalt price will go up tens or hundreds of times up and stay at high level for long enough. Even then, it takes up to decade and billions from some reserves to production mines.

Tesla, Panasonic, LG must be already looking at alternative battery technologies, one safe Lithium battery is Lithium Plastic even though they probably have to conduct tests and look at how it performs in cold/hot temperatures. Lithium Plastic batteries can be shot at ripped violently but wouldn’t catch fire or explode.

They could be also be looking at the Sodium Glass Solid State battery which has a potential to run a Model-S upto 1000 miles, and Bolt upto 750 miles on single charge for the same battery density, but it might take 10 years for them to make any production version.

Yes, there does seem to be a reasonable hope that the next generation of EV batteries will use considerably less cobalt, or perhaps even none at all. As the price of cobalt rises, so do the efforts to find cheaper alternatives.

“Necessity is the mother of invention.”

“Electric Car will have lower cost of ownership than gas cars starting in 2018 with Tesla 3 and the Tesla 3 with add-ons will be profitable”

These cars had a lower cost of ownership from day 1.

The article says this about UBS’ teardown and assessment of the Blt and related projections about the Model 3:

“Tesla to lose $2,800 on entry-level versions of its soon to be introduced Model 3 but think customers will opt for extra cost options that will raise the average selling price to $41,000 — $6,000 more than the base price. Tesla will be able to break even at that price, they believe.”

Two things:
(1) That’s a 14% Gross Margin, actually not bad, but for a car in that class not so good (considering that Tesla does bnot count amortized R&D in their Cost of Revenue)
(2) 14% GM is barely sufficient to achieve overall breakeven at the EBIT line, which the article properly notes.

How is breakeven at the EBIT line “profitable”? I know you’re merely quoting here, and so you’re not responsible for an incorrect assertion in the title, but maybe you could explain the new acocunting rules that say breakeven on an optioned-up model before Interest and Taxes = “profitability”.

When material costs goes up, it’s harder to achieve battery price cuts, but fortunately material costs still only a fraction of the entire equation.

Rising cobalt prices are certainly a worry for the EV revolution, but the suggestion here that rising lithium prices are a problem is nothing but fear-mongering.

A few years back, lithium prices tripled in (as I recall) just five years, but still the price of EV batteries continued to drop, because the cost of processing the materials and assembling the cells far outweighs the cost of the raw materials. As manufacture of li-ion cells continues to rise at an exponential rate, the economy of scale and continuing improvements in energy density (which means more kWh from the same amount of raw materials) will continue to bring per-kWh prices down even as cobalt prices go up.

Revolutionary new method of manufacturing cathodes enables the use of more abundant types of lithium and promises a 50% cut in battery prices. And a much better battery to boot. THIS is the astounding and relevant news concerning battery prices, NOT the increase in lithium prices.

You have my interest. Just what are the low cost types of lithium they are proposing?

BTW: the high-efficiency/high-performance induction or switched reluctance motors that crow about their absence of rare-earth metals generally use Cobalt in the very high permeability magnetic materials.