April 18, 2017 9:10 am JST

Electric cars face cost pressures as key metals soar

Cobalt up more than twofold since last year

Nissan's Leaf electric vehicle.

TOKYO -- Car and battery manufacturers developing electric vehicles are hard-pressed to keep costs down as prices for key metals skyrocket.

The international price of cobalt, a material used in rechargeable lithium ion batteries, rose to an eight-year high of around $27.50 per pound in mid-April, a 90% increase since the beginning of the year and 2.5 times greater than a year ago. Cobalt is "being bought on the anticipation of increasing demand for use in electric vehicles," according to an official at a major trading house. 

The contract price of lithium, another material used in electric vehicle batteries, has risen about threefold compared to two years ago in China, whose market is an international benchmark for the metal.

The rise comes as automakers energize their electric vehicle strategies. A battery factory Tesla operates jointly with Panasonic in Nevada went online in January. Costing around $5 billion, it is one of the world's largest battery factories and will supply batteries for Tesla's Model 3 car, which is to begin production this year. It is believed the Model 3 has already received about 400,000 orders.

Nissan, meanwhile, will release a new model of its leading electric car, the Leaf, in the near future, Chairman Carlos Ghosn said in January at the CES electronics show in Las Vegas, Nevada.

In addition to growing demand for use in electric cars, rare metals have surged due to supply chain concerns. Cobalt is a byproduct of nickel and copper, but supply is falling as mining companies roll back production due to a sluggish copper market and stronger environmental regulations. Some are also worried about instability in the Democratic Republic of the Congo, which is a major producer of cobalt.

Reducing battery costs has become a task for electric car developers. Nissan is holding negotiations to sell a battery joint venture with NEC, hoping to lower costs by procuring batteries from outside manufacturers.

Cobalt is said to account for about 20% of the components cost for batteries. Domestic battery manufacturers are worried that a further rise in price could make it difficult to procure materials and lead to delays in development.

(Nikkei)

Panasonic Corp.

Japan

Market(Ticker): TKS(6752)
Sector:
Industry:
Consumer Durables
Electronics/Appliances
Market cap(USD): 29,269M
Shares: 2,453.05M

Nissan Motor Co., Ltd.

Japan

Market(Ticker): TKS(7201)
Sector:
Industry:
Consumer Durables
Motor Vehicles
Market cap(USD): 40,064.8M
Shares: 4,220.72M

NEC Corp.

Japan

Market(Ticker): TKS(6701)
Sector:
Industry:
Electronic Technology
Electronic Equipment/Instruments
Market cap(USD): 6,470.37M
Shares: 2,604.73M

Get Insights on Asia In Your Inbox

To read the full story, Subscribe or Log in

Get your first month for $0.99

Redeemable only through the Subscribe button below

Once subscribed, you can…

  • Read all stories with unlimited access (5 articles per month without subscription)
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

We could not renew your subscription.
You need to update your payment information.

To read the full story, Subscribe or Log in

Once subscribed, you can…

  • Read all stories with unlimited access (5 articles per month without subscription)
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

We could not renew your subscription.
You need to update your payment information.