Prices of lithium have been falling sharply since early this year, meaning that less expensive electric vehicles may be expected in the future. After a two-year surge, the main battery ingredient declined by more than 65% as of January 2023.
In November, the price reached a peak at $85,000, and Jean-Charles Cachon, an analyst from the mining industry, says it’s too high to be sustainable. Currently, this metal is now going for less than $30,000 a metric ton.
Cachon pointed to China’s withdrawal of the electric vehicle subsidies that led to slower sales and a reduction in demand for these environmentally friendly auto alternatives. According to him, this slump in price was triggered when lithium prices that had actually been more than 10 times the production costs went down as a result of China’s slowdown in January.
This isn’t only for lithium: Prices are falling for the rest of the metals used to make batteries, such as nickel and cobalt. As the price of these essential minerals continues to decrease, Daniel Breton says that it’s possible that this slowdown may be advantageous for consumers and that another wave of electric cars selling between $25,000 and $40,000 can be expected as the production of batteries gains momentum in the sector.
In parallel, mining corporations all over the world have seen their profitability squeezed by falling prices. Josée Méthot, CEO of the Quebec Mining Association, stated that even though the industry has been known to see rises and falls in the prices of minerals, some investors will be alarmed. But, according to him, this isn’t a deterrent to anyone who has the ability to understand markets and anticipate future market demand.
Trevor Walker says that right now there is nothing to be afraid of. Despite the current prices on the market, he claims that the manufacture of lithium salts costs approximately $9,000 to $10,000 for each metric ton, so producers are still making a profit.
The high prices of the battery-grade metal are still attractive enough to attract industry participants, large and small, in order to continue with fresh projects. Currently, according to the government of Canada, a total of approximately 3.2 million metric tons of lithium oxide exist at their different mine sites.
As the automotive sector in Ontario begins to make electric cars as well as EV batteries, Walker predicts a growing demand for lithium salts. He has a company that is in the early stages of production but aims to supply automakers.
The public can look forward to more affordable electric vehicles from several manufacturers such as Lucid Motors (NASDAQ: LCID) as the result of dropping raw material prices.
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