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The prices of the three most important raw materials for batteries in electric cars, lithium, nickel and cobalt, have fallen again after a sharp increase. The price of lithium is almost 70 percent lower, nickel is 40 percent cheaper and cobalt is almost 15 percent cheaper compared to the peak.
Colin Hamilton, commodities analyst at BMO Capital Markets, says to Bloomberg that there is currently ‘certainly enough supply of all these raw materials’. This is expected to remain the case. The consultancy firm Benchmark Mineral Intelligence expects that there will be a surplus of lithium, nickel and cobalt in the coming years. Prices for lithium, nickel and cobalt are expected to remain low for the time being. The consultancy expects another shortage of lithium and nickel in 2027 or 2028. From 2026, demand for cobalt is expected to exceed supply again.
The declining sales growth of electric cars and the increasing supply of batteries contribute to the decline in raw material prices. Supply is increasing, partly due to the expansion of production capacity in China through government support. A year ago, the prices of battery raw materials actually rose sharply.
The price drops of battery raw materials will potentially reduce production costs for automakers. It is not clear whether consumers will see this reflected in the prices of electric cars. Moreover Citigroup warned recently that Indonesia may be planning to increase nickel prices. The country produces more than half of the world’s nickel. China is also reportedly planning to increase its strategic stockpiles of cobalt. Cobalt is important in the defense and aerospace industries.