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Charge of the Lithium Brigade
Lithium is one of a number of essential natural resources used in the production of EV batteries. But the trading of it between extraction companies and buyers is frustratingly opaque, say industry insiders. Photo © Matyas Rehak

Charge of the Lithium Brigade

By Simon Johns - Mar 06, 2019

In a coordinated strategy to stimulate domestic electric battery production, the Chinese government has reduced import duties on lithium carbonate and cobalt sulfate while hiking tariffs on imported batteries.

China’s EV battery sector is already growing apace after domestic EV maker BYD announced it opened its third
lithium-ion battery plant that, in the estimation of one natural resources consultant, will double the size of Tesla’s Gigafactory 1 assembly unit in Nevada, United States.

The U.S. $1.5 billion BYD factory is slated to have annual capacity of 24 gigawatt-hours, which would be enough to install batteries in 1.2 million of the Warren Buffet-backed carmaker’s Tang marque vehicles, according to a BYD statement. The lithium-rich Qinghai province is part of plans to increase its battery production capacity to 60 GWh over the next two years.

Another Chinese automaker, Geely, and compatriot battery producer Contemporary Amperex Technology agreed to form a $145 million joint venture called CATL Geely Power Battery Co. Ltd. The new company will research and develop, produce and sell batteries, battery modules and battery packs. Geely will own 49% of the JV with the rest belonging to Contemporary Amperex Technology. In November 2018, sales of Geely BEVs passed 10,000 units, representing 31% year-on-year growth.

“Lithium prices shot up at the end of 2015 and have just recently gotten soft, which is misleading because demand for lithium batteries is going straight up, with over 60 giga-sized factories being built around the world.”
— Stock Shaman

The cost per kilowatt hour of batteries has come down steadily as production methods have automated, despite a dramatic increase in the price of lithium, a key raw material in their production, a mining investment consultant who prefers to go by the name Stock Shaman, told Lubes’n’Greases

EV battery packs cost an estimated $1,000 per kilowatt-hour in 2010, falling to $190/kWh for Tesla’s Model 3 battery pack and $205/kWh for General Motors’ Chevrolet Bolt battery pack today, according to figures from the Union of Concerned Scientists.

“Lithium prices shot up at the end of 2015 and have just recently gotten soft, which is misleading because demand for lithium batteries is going straight up, with over 60 giga-sized factories being built around the world,” Stock Shaman said. A Tesla Model 3 uses around 60 kilograms of lithium. Cobalt is also used in lithium-ion batteries, with cobalt sulfate used for battery cathodes.

But there are some complaints that the trade of lithium lacks transparency. Unlike other metals such as copper and aluminum, lithium is not traded on an exchange. Stock Shaman calls the situation “frustrating.” 

“Right now, it is hand to mouth, meaning that end users are tying up supply contracts with mines that are being built. To call the element to trade [i.e., offer an option to buy], you would have to stockpile lithium at the London Metal Exchange warehouse. There is no slack in the market right now for that to occur. The market for lithium is like the market for uranium – very opaque,” he said.

The London Metals Exchange – the international metals trading house – says it will roll out contracts for lithium in 2020. 

Natural resources consulting and research company Wood Mackenzie predicts global lithium production could reach 700,000 metric tons by 2025 with rechargeable lithium-ion batteries accounting for 70% of that, up from 45% in 2018.