The Biden administration’s continuing effort to argue that electric vehicles will help speed our way out of the current mess reflects a refusal to deal with the uncomfortable realities of the world in which we live. Magical thinking is so much easier.
The Biden administration has been labelled “tone deaf” after Pete Buttigieg and Kamala Harris spent the afternoon promoting electric vehicles in the wake of America’s highest gas prices since 2008. The Transportation secretary was joined by the VP to commemorate the one year anniversary from when the Biden administration passed the American Rescue Plan Act. Mr Buttigieg has been criticised for telling Americans electric cars are important for “cost savings”. “Clean transportation can bring significant cost savings for the American people as well,” he said.
Cost savings?
Electric vehicle car makers are bracing for a set back as the price of nickel soars.
As one of the most important components in lithium-ion battery cells, used in most electric vehicles (EVs), nickel is a vital material for the likes of Elon Musk’s Tesla to build and sell cars. It is the third-largest component in a car battery, following graphite and lithium.
Meanwhile, the metal is also essential for increasing how far electric cars can travel in one charge: the more nickel in the battery, the higher the energy density and the greater the range of an EV with the same weight.
But as Russia’s invasion of Ukraine adds to already surging raw materials costs, car makers will be forced to fork out more cash to make batteries, already the most expensive part of EVs – or find alternative sources.
The price of nickel has gone berserk this week. That reflects a short squeeze after a bet by China’s Tsingshan Holding Group (a nickel giant) went horribly wrong. That’ll iron itself out quickly enough, but the underlying rise in nickel prices is not likely to be going away any time soon.
The Financial Times (my emphasis added) :
Prices of the metal had already been rising following Putin’s invasion of Ukraine. Russia supplies nearly 13 per cent of the total global nickel mining capacity in 2021, according to consultancy Rystad Energy.
The Daily Telegraph (again, my emphasis added):
[I]f Russia is frozen out of the market by sanctions or customers keen not to be tainted by dealing with the nation or its government, “we’re going to see increased competition,” said Miller.
In other words, other uses of the metal such as from steelmakers and magnet producers will be fighting over a smaller marketplace, adding to price pressure.
Companies looking for supplies elsewhere, outside Russia, would be hard for the market to manage, according to Simon Moores, chief executive of Benchmark Mineral Intelligence. He says a new mine can take five to seven years to produce, making the decision to open them a risky one…
Still, alternatives do exist for car makers, as new chemistries are developed including lithium ion phosphate.
According to Moores, this is a “lower end, lower quality battery” which is being used by car companies in China – the world’s largest automotive market – to roll out production. Companies could pack more of these batteries into cars to cut nickel usage if they wanted.
It is Chinese car makers, he argues, that will be the winners while the US and European EV producers, such as Tesla and Renault, will lose out.
“The reality is China will happily take nickel and cobalt and other raw materials from jurisdictions that the West wouldn’t. And as a result, they will go further and faster with EVs and batteries,” says Moores.
The notion that China may dominate at least the affordable end of the EV market is a touch difficult to reconcile with the narrative of green new jobs that the administration is also so insistent on pushing, but there we are.
There’s also that nagging question, made more nagging still by the current Russian trauma, as to whether it is wise for this country, or its allies, to be dependent on a geopolitical rival in any industry that matters now or could matter in the future.
The answer to that question ought to be obvious, but . . .