The prices of lithium and nickel, key minerals for electric vehicle batteries, have been diverging since late last year, which is set to further widen the price gap between South Korean and Chinese battery makers.
The lithium price has come off the peak touched last year on growing supply, shedding 20% in the past two months.
On Jan. 3, the price of lithium tumbled to 474.5 yuan ($70) per kilogram. The so-called “white oil” makes up 40% of the manufacturing costs of EV batteries.
By contrast, nickel has reversed its downward price trend. It has surged more than 40% since November of last year.
Korean companies focus on high-nickel batteries, whereas Chinese rivals' main products are lithium-ion phosphate (LFP) batteries that do not contain nickel.
According to the Korea Mine Rehabilitation and Mineral Resources Corp., nickel traded at $31,200 per ton on Jan. 3, returning to the price level seen in May of last year.
Nickel plays a vital role in enhancing the performance of EV batteries. A higher nickel content increases their mileage and energy density.
Until the first half of last year, its price had remained soft, as it had been for other battery materials such as cobalt and manganese. They had suffered weak demand amid fears of an economic downturn.
Graphics by Sunny Park NCM BATTERIES
The soaring nickel price is posing a threat to South Korean battery makers, further weakening their price competitiveness over Chinese rivals.
LFP batteries boast greater stability than NCM. But they have lower energy density and shorter mileage than NCM batteries, as well as longer charging time.
The declining lithium price will likely slash the manufacturing costs of LFP models and prompt EV makers to shift from high-nickel batteries.
