The IMF says electric cars face a bumpy road ahead. Their press release on August 13th 2018 confirms a surge in demand for electric cars. This demand gets its impetus in part from greater manufacturing economies of scale with lithium-ion batteries. This in turn benefits from technological progress with powering everything from electric cars to smartphones. But despite this, it warns that electric cars face a bumpy road with battery material prices rising.
Lithium and Cobalt Prices – Two Challenges Electric Cars Face
Cobalt and lithium are fundamental components of electric car batteries. The IMF notes how a rapid increase in demand for rechargeable batteries has driven their prices higher. This may result in lithium and cobalt shortages that could slow the roll out.
The price of lithium carbonate increased 30% during 2017. However the staggering 150% increase in cobalt prices between September 2016 and July 2018 dwarfs this.
This is not the first time cobalt has spiked according to the graphic below. While the price of lithium carbonate may fall back, the IMF believes limited supply will keep cobalt expensive in the face of high demand.
Cobalt Supply Is Unstable, Will Technology Come to the Rescue?
Therefore, electric cars face an almost perfect storm of insecure supply and rocketing prices. However, this could cause cobalt production to accelerate and slow price increases to manageable proportions.
The long-term key may be to cut back on cobalt demand, forcing prices to come down once again. We have two ways to achieve this.
Firstly, we could accelerate cobalt recycling and develop new mining technologies. Perhaps more importantly, we could reduce the cobalt content in current lithium batteries.
But the real solution lies in cobalt-free, solid state batteries that are far safer because they are non-flammable. This is of the utmost importance to the future of both portable electronics, and electric cars.
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