MAC: Mines and Communities

Is lithium about to win over the old polluters in cars?

Published by MAC on 2020-02-22

Lithium and iron phosphate batteries may be about to drive those historically dangerous and polluting metals, nickel, cobalt and aluminium, into the long grass, if Tesla has its way in China.

Will most of us - car users or not - be that concerned?


Tesla’s China surprise big blow for cobalt, nickel price bulls

Frik Els

19 February 2020

Long-suffering cobalt bulls were dealt another blow on Wednesday after
reports that the world’s largest electric carmaker is shifting some
production of its most popular model away from batteries that contain
nickel and cobalt.

In a surprise move, China’s top battery manufacturer CATL will supply
Tesla with lithium iron phosphate (LFP) batteries for its Model 3
production at its newly built $2 billion factory outside Shanghai.

The Model 3 is Tesla’s most popular, and the US-made version uses the
company’s nickel-cobalt-aluminum (NCA) cathode chemistry. Most other
automakers favour nickel-cobalt-manganese (NCM) cathode chemistries.

Cobalt miners may make up some lost ground if the Model 3 proves
popular in China, which accounts for half the world’s EV sales

LFP batteries are cheaper than batteries using NCA and NCM chemistries but
lack the energy density, reducing driving range. LFP batteries power
almost the entire electric bus fleet in China and are popular for smaller
city runabout vehicles where range is not an issue.

According to Benchmark Mineral Intelligence, a battery supply chain and
price reporting company, cobalt played no part in Tesla’s decision to use
LFP cells:

The move is a specific strategy to balance the cost reduction of Model
3 with appropriate range and performance for China’s domestic market.

Benchmark believes LFP powered model 3s will qualify for China’s EV
subsidies as range estimates with Tesla’s drivetrain efficiency will take
it beyond the 250km (155 miles) threshold for the minimum subsidy payout
of CNY 18,000 (roughly $2,600).

Benchmark estimates that the total cost saving for Model 3 made in the US
using NCA cells will be in excess of 25%, but is unlikely that Tesla will
produce LFP models outside China.

Cobalt miners may make up some lost ground if the Model 3 proves popular
in China, which accounts for half the world’s EV sales. Tesla plans to use
NCM 811 cells (~80% nickel, ~10% cobalt) supplied by LG Chem for its
long-range Model 3s for the domestic market.

Benchmark domestic Chinese prices for cobalt sulphate jumped by more than
10% in January, to $6,900 a tonne. Measured from multi-year lows hit
during the summer, prices for cobalt used in the battery supply chain have
recovered 30%.

Chinese nickel sulphate prices fell an average of 5.8% on the previous
month in January, according the Benchmark data, but at CNY24,500 ($3,500)
ex-works >22% nickel content, prices are flat year-on-year.


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