Considering how global governments have been vocal, even aggressive, about their respective plans to shift to clean, carbon-free energy, recent events have been a cause for concern for many experts, particularly the current oversupply of lithium and other necessary materials for the transition.
Over the past couple of years, the price of lithium has plunged by over 80%. Subsequently, the prices of other key materials for electric vehicle (EV) battery production have also fallen: nickel and cobalt are both down by 40%, while copper fell by a more modest 10%.
As a result, most lithium mines and those used to source other vital minerals are no longer as profitable as they were at the beginning of the lithium boom immediately preceding the pandemic. A number have already ceased operations, and this puts a damper on the shift to EVs, particularly in Australia.
The Problem with Prices
Recently, Republican governors in the United States collectively remarked that Americans were not interested in buying electric vehicles. The head of policy of Australia’s Electric Vehicle Council, Jake Whitehead, says that the same could be said of his people.
Whitehead opines that the significant price difference between EVs and gasoline-fueled vehicles stands in the way of mainstream adoption. It had been hoped prior to the global outbreak of COVID in early 2020 that cost parity between the two would happen by 2025. Unfortunately, the economic impact of the pandemic – specifically factory closures, supply chain issues, unharnessed inflation, and the soaring cost of living – have caused most people to reconsider buying an EV in favor of a less costly fossil fuel-powered vehicle.
A Ray of Light
Despite this grim present, British energy think-tank Rho Motion notes that the current market issues will not hamper the global demand for lithium which will stay strong over the next few years.
Based on its recent findings, the demand for rechargeable lithium batteries is up by 44%. Indeed, the group expects lithium batteries to remain the driving factor in the EV scene, even if alternatives become more available and affordable.