The price of lithium carbonate continues to skyrocket and has reached a new record. The unstoppable rise in the price of lithium will increase the cost of batteries, which puts at risk the transition to electric cars that Europe is experiencing. Rising costs are fueling concerns about inflation and adding pressure to the supply chain.
The transition process to fully electric mobility is not being a bed of roses. Although the European Commission has outlined a route for the year 2035, in recent times numerous challenges have emerged that seriously jeopardize the switch to battery-powered electric cars. And precisely the batteries are in the spotlight in this particular “perfect storm” that has formed over the European automotive industry.
The escalation of lithium carbonate prices is a fact. A price increase that threatens slow down the massification of the electric vehicle. This component, key to the batteries used by the automobile industry, is experiencing a rise in prices that seems unstoppable. lithium carbonate has set a new record 500,000 yuan (71,400 euros) per ton in China.
The price of lithium carbonate triples compared to 2021
According to data provided by Asian Metal Inc and published by Bloomberg, prices have tripled compared to last year. This increase will direct effects on the cost of batteries, the main component of an electric car. The rise in lithium prices has occurred practically in parallel with the rise of the electric vehicle. Unfortunately, the price increase takes place at a very delicate time for the sector.
Consumer support for new energy vehicles has accelerated amid a global transition away from fossil fuels. The China Passenger Car Association (CPCA) has recently raised its electric vehicle sales forecast to 6 million units in 2022. A forecast that, if materialised, will set a new record.
One of the factors that has influenced the rise in lithium costs It has been temporary and occurred last August in the province of Sichuan, which is home to more than a fifth of China’s lithium production. An energy crisis caused two weeks of power outages, which has hampered supply to local industry.
The concern before a complicated winter
in the Chinese industry there has been some concern given the possibility that next winter will be especially hard. When the demand for heating increases due to low temperatures, there is a risk of experiencing a new energy crisis, which ends up affecting the supply of lithium, as has happened this summer.
China’s Ministry of Industry and Information Technology has asked major companies to act to help stabilize prices. It has also become known of the intention of the Chinese authorities to facilitate the exploration of new lithium deposits. Similarly, new actions will be launched to promote the recycling of batteries that have reached the end of their useful life.
Just a few days ago, the Chemical and Mining Society of Chile, the world’s second largest lithium producer, predicted “a very tight market” for the next few years. Similarly, he stressed that “slightly higher” prices are expected this quarter compared to previous months and a certain price stabilization above 71,000 euros for the remainder of the year.
In such a volatile environment, battery manufacturers and the auto industry have scrambled to secure a reliable and stable supply of lithium. This further fuels price escalation and adds additional pressure to the supply chain.