By Andy Home
LONDON- Electric vehicles (EVs) were supposed to supercharge demand for metals such as lithium, nickel and cobalt.
Yet prices for all three EV battery inputs have fallen to such bombed-out levels that producers are curtailing output and deferring new projects.
This is partly a problem of oversupply. Explosive price rallies in 2021 and 2022 resulted in too much new production capacity being brought online too quickly.
But it is also a problem of demand.
The transition away from the internal combustion engine has by no means ground to a halt. Global new energy vehicle sales were up by 20 percent year-on-year in January-August, according to consultancy Rho Motion.
Rather, the mix of vehicles being sold and the evolution of battery chemistry have dramatically changed the metals demand dynamic.
Pure battery electric vehicle (BEV) sales have underperformed expectations due to buyers’ concerns about limited driving range and charging infrastructure.
By contrast, hybrid and plug-in hybrid cars, which have both a battery and internal combustion engine, have soared in popularity.
The increase in global sales of BEVs slowed to 10 percent year-on-year in the first eight months of 2024, while plug-in hybrid (PHEV) sales jumped 46 percent, according to Rho Motion.
This trend has been led by China, the world’s largest EV market. The key driver is the emergence of the extended range electric vehicle (EREV), a type of PHEV that uses the gasoline engine solely to charge the battery, giving the vehicle an extended driving range of more than 1,000 kilometers (621 miles).
EREVs now account for 31 percent of all plug-in hybrid sales in China, according to research house Adamas Intelligence, which expects them to enjoy similar success in both Europe and the United States.
Major automakers are embracing hybrids in all forms as a relatively low-cost transition technology between gasoline and pure electric vehicles.
Hybrids don’t need the same battery power as a BEV. Adamas calculates that battery pack capacity in a PHEV is a third of that in a BEV, which means a similar-sized reduction in the amount of lithium, nickel and cobalt used per vehicle.
Other metals, however, stand to benefit from the rise of the hybrids. Platinum and palladium, which are used to clean auto exhausts, have been granted an unexpected new lease of life.
While the new energy vehicle mix is changing, so too is battery chemistry. – Reuters
