Battery raw material price surge may dent short-term demand for EVs

The current spike in battery making raw materials such as lithium, cobalt and nickel may cause some dent to demand for electric vehicles (EVs) in the short-term. But, prospects for EVs in the long-term is promising, says Anand Kabra, Vice-Chairman and Managing Director, Kabra Extrusion Technik Ltd.

Kabra Extrusion Technik, a listed entity, is a unit of the ₹1,000-crore Kolsite Group. It owns Battrixx which designs and manufactures lithium-ion smart battery packs with battery management system at its state-of-the-art Chakan plant in Pune, Maharashtra.

Small speed-bump

“All governments worldwide are supporting the shift from oil to green energy sources like solar and wind, and usage of electric vehicles. So, while the current price rise could cause some dent to the demand in the short-term, the long-term future for EVs is very promising,” Kabra told BusinessLine.

Pointing out to studies projecting a 100 per cent growth in Indian two-wheeler EVs, he said: “The price rise is a very small speed-bump in the overall growth of EVs.”

His views are in tune with research agencies and analysts. US research agency Fitch Solutions Country Risk and Industry Research (FSCRIR), a Fitch unit, said the ongoing surge in nickel, lithium and other battery material prices will translate into higher costs for EV battery manufacturers and EV automakers.

According to ING Think, the economic and financial analysis arm of Dutch multinational financial services firm ING, a stronger price environment (of EV battery raw material) does have the potential to slow the pace of energy transition.  

Cause for concern

Kabra also expressed concern over the rise in nickel prices. With Russia producing 20 per cent of the world’s premium nickel, a big component in the lithium-ion battery, prices of batteries are strengthening and rising further, he said. 

“There are some mineral resources in Russia and Ukraine which are a cause of concern for the industry,” said the official of Battrixx. , which has state-of-the-art manufacturing facility at Chakan, Pune in Maharashtra

According to the Trading Economics website, lithium prices have gained 70 per cent and nickel over 50 per cent year-to-date. Rise in other key raw materials for EVs such as cobalt, which has gone up by 17 per cent this year and is ruling at a four-year-high, has also caused concern.

New technologies

On the rise in demand for EV raw materials, Kabra said: “The demand for EVs is increasing and raw material prices have risen in tandem.

“Cell prices have also risen as a corollary. This has made us to explore new technologies other than lithium or the materials that are in usage,” he said. 

Temporarily, due to a huge upsurge in world demand, raw material prices have gone up. “However, on the macro-side, this may be a very small speed bump. So, we don’t see this impacting the EV growth momentum,” the Kabra Extrusion Technik V-C and MD said.

Kabra said the current spike in crude oil prices, spurred by the Russia-Ukraine conflict, will boost the electric vehicle (EV) industry in the long-term with countries such as India wanting to adopt EVs “even faster”. 

Upcoming alternative

On the alternatives to lithium nitride, which is pricey, he said the “gold  standard” has always been lithium metal with its very high specific capacity. However, because of safety issues in using lithium due to its very high reactivity level with both oxygen and water and the challenges associated with its reversibility , the metal has mainly been used for primary batteries until recently. 

“But due to the development of the solid-state battery, it is getting renewed interest and looks like an upcoming alternative candidate,” he said.

Kabra said there is a significant growth especially in the areas of silicon and tin anodes, or more specifically in alloyed or blended anode materials using a graphite base and blending in small amounts of silicon or tin.

“These elements offer between 2 to 10 times the theoretical energy density of the carbon-based graphite materials and hence of great interest under research globally,” he said.

Lithium recycling

To a question on lithium recycling, Kabra said technologies are available to recover most components of a lithium-ion battery with very low wastage.

“So, definitely, it is imperative. We can imagine what will happen to the world after five years with the huge number of lithium batteries that will come back after their lives end. We don’t want to create another problem for the world with them,” he said.

Already good commercialised technologies as well as new processes are available for recycling. “We should also be seeing the same in a very large way in our own market in India. Other than that, there will be a second life for the battery besides recycling, where EV batteries can be used for energy storage, Kabra said.

Asked about the Centre’s battery-swapping policy, he said the government has announced the interoperability of batteries in the swapping stations’ business.

“We have also given our inputs to the government on the possible challenges that need to be addressed when we attempt standardisation. The government will soon publish the norms,” he said.

Anand Kabra, Vice-Chairman and Managing Director, Kabra Extrusion Technik Ltd

More needs to be done

Kabra also emphasised that there is a lot of work needs to be done for the better management of battery supplies and battery swapping stations.

“But, there are very large companies that are also going to become energy operators. Like any new industry, this will take some time, but it will surely stabilise,” he said. 

Battrixx has got four possible designs ready within the specifications expected from the government. “We will offer them to the market depending on user needs,” Kabra said.

He, however, observed that overall standardisation of batteries is unlikely to happen as the original equipment manufacturers (OEMs) differentiate themselves from one another.

He, however said since the original equipment manufacturers (OEMs) differentiate themselves from one another, his company does not see an overall standardization to happen on the batteries front. 

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