Electric car batteries: nickel not yet dead.

In La Tribune 19/02/2020

The case of the batteries that will equip Tesla’s S models produced in China using a Lithium Iron-Phosphorus recipe instead of Lithium Nickel-Manganese-Cobalt is a wake-up call.

In 2020, demand for cobalt was expected to depend on 30% of automotive batteries and 70% of other applications including batteries for electronic devices, but in 5 years the automotive share was expected to rise to 60%. As we said a few weeks ago about prices, the mass was not said, a large substitution from NMC to LFP batteries would be revealing and a very severe blow for cobalt artisanal miners.

For nickel the case is less important, but substantial nonetheless. Batteries for electric cars account for about 2 % of the demand for nickel and it is expected to balance between 15 % and 20 % within five years. However, the new outlook is revolutionising the viewpoint for both speculators and nickel producers, who have less assurance than in the past that they will have a new and large customer base. The old question of Saint Augustin is therefore posed to nickel: should he abandon an old friend, stainless steel, for a new companion which proves to be less reliable, batteries?

Other facet of the panorama, the Chinese CATL has therefore rejuvenated the LFP technology for Tesla, so that it is more efficient in energy density, endurance and safety, but also in cost. At the “Paris Citi Life” forum organised by La Tribune in December 2019, another Chinese manufacturer, BYD, confided to me that they were also working on this topic. Naturally, it already assembles coaches and forklifts equipped with LFP batteries in Europe, notably in Beauvais. In addition, there are many manufacturers of battery parts, especially cathodes, both in Europe and Asia. Too many in an industrial context. The beginnings of a consolidation are already underway at the risk of temporarily weakening the sector.

All in all, it is indeed a whole section of the demand for cobalt and nickel that could be threatened by a NMC-LFP substitution. On the one hand, the choice for electric propulsion engineers is low-cost city electric cars, and LFP is at least 30 % cheaper than NMC. On the other hand, they still need to optimise the cost-technology mix for the more powerful and enduring cars that will be driven outside the cities. Then, the range of future solutions for both is still wide and causes other indecisions related to the wishes of Social and Responsible Investment between batteries fitted with sodium, lithium metal and others… As for hydrogen, for its ion exchange it carry the burden to use the same platinum from South Africa, Russia and Canada as a diesel or petrol car catalytic converter.

This is why it will appear contradictory that the resistance of the latter is favoured by the well-meaning environmental, social and governance criteria.