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Lithium Prices Surge on EV Demand from China

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lithium prices

Lithium Prices Surge on EV Demand from China

Amid growing conviction on the bright future of electric vehicles (EVs), the scramble for battery metals like lithium is just beginning.

By the first week of 2022, prices for lithium carbonate, a key ingredient in lithium iron phosphate (LFP) batteries, reached a new high of 300,000 yuan or nearly $47,500 per ton in China.

The above graphic charts the exponential surge in both lithium prices and China’s EV sales between 2015 and 2021.

How Lithium Prices Changed in 2021

After brief spikes in 2016 and 2017, lithium prices were on a downtrend until 2021. With that context, it’s safe to say that the year’s 497% surge was nothing short of dramatic.

Here’s how lithium prices changed in 2021, on a quarterly basis:

DateLithium carbonate price per ton in China*% increase in 2021
January 01, 2021$7,328.900%
April 01, 2021$13,396.9082.70%
July 01, 2021$14,024.4091.40%
October 01, 2021$27,733.70278.50%
December 31, 2021$43,732.80496.70%

*Represents prices for battery-grade lithium carbonate. Converted from yuan to USD via xe.com as of Jan 19, 2022.
Source: TradingEconomics

As producers struggled to keep up with rising demand for battery-grade lithium carbonate, prices increased six-fold in 2021.

This rise was amplified in October when Tesla announced a switch to LFP batteries for all of its standard-range cars. Previously, Tesla only used LFP batteries for cars produced in China.

EV Batteries and the Resurgence of LFP Cathodes

Why did Tesla make the switch?

LFP was the initial cathode chemistry used in lithium-ion batteries for EVs in China, the largest market for EVs. Over time, consumer preferences for longer driving ranges drove manufacturers towards higher-density lithium nickel manganese cobalt (NMC) cathodes, which can manage longer distances on a single charge.

However, most of the cobalt used in NMC batteries comes from the Democratic Republic of the Congo, where cobalt mining is associated with several humanitarian issues. These concerns, along with the high material cost of cobalt, prompted automakers to look at alternative cathode chemistries.

This has caused automakers like Tesla to turn back to LFP cathodes, which do not require cobalt and are relatively cheaper to produce.

Lithium’s Electric Future

According to BloombergNEF, global EV sales were on track to hit 6.3 million units in 2021—nearly double the total of 2020.

However, despite recent growth, EV adoption has a long way to go, with EVs making up just 4.3% of global auto sales in 2020. This suggests that the future is bright for battery metals like lithium, which will likely continue to be in high demand.

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Electrification

Every Electric Semi Truck in One Graphic

A wave of electric semi trucks is expected to arrive over the next few years. View this infographic to learn more.

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Every Electric Semi Truck in One Graphic

Electric semi trucks are coming, and they could help to decarbonize the shipping and logistics industry. However, range remains a major limitation.

This presents challenges for long-hauling, where the average diesel-powered semi can travel up to 2,000 miles before refueling. Compare this to the longest range electric model, the Tesla Semi, which promises up to 500 miles. A key word here is “promises”—the Semi is still in development, and nothing has been proven yet.

In this infographic, we’ve listed all of the upcoming electric semi trucks, complete with range and charge time estimates. Further in the article, we’ll explore the potential commercial use cases of this first generation of trucks.

Model Overview

The following table includes all of the models included in the above infographic.

CompanyTruck NameRangeCharge Time Expected Delivery
🇺🇸 TeslaSemi300-500 milesTBD2023
🇺🇸 FreightlinereCascadia250 miles80% in as low as 1.5 hrs2022
🇸🇪 VolvoVNR Electric275 miles80% in as low as 1 hr2022
🇺🇸 KenworthT680E150 miles100% in as low as 3.3 hrsTBD
🇺🇸 Peterbilt579EV150 miles100% in as low as 3.3 hrs2022
🇨🇳 BYD8TT167 miles100% in as low as 2.5 hrsIn operation
🇺🇸 NikolaTre BEV350 miles10% to 80% in as low as 2 hrs2022

Source: US News, CNBC, InsideEVs

With the exception of Tesla’s Semi, all of these trucks are currently in operation or expected to begin delivering this year. You may want to take this with a grain of salt, as the electric vehicle industry has become notorious for delays.

In terms of range, Tesla and Nikola are promising the highest figures (300+ miles), while the rest of the competition is targeting between 150 to 275 miles. It’s reasonable to assume that the Tesla and Nikola semis will be the most expensive.

Charge times are difficult to compare because of the variables involved. This includes the amount of charge and the type of charger used. Nikola, for example, claims it will take 2 hours to charge its Tre BEV from 10% to 80% when using a 240kW charger.

Charger technology is also improving quickly. Tesla is believed to be rolling out a 1 MW (1,000 kW) charger that could add 400 miles of range in just 30 minutes.

Use Cases of Electric Semi Trucks

Given their relatively lower ranges, electric semis are unlikely to be used for long hauls.

Instead, they’re expected to be deployed on regional and urban routes, where the total distance traveled between destinations is much lower. There are many reasons why electric semis are suited for these routes, as listed below:

  • Smaller batteries can be installed, which keeps the cost of the truck lower
  • Urban routes provide greater opportunities to use regenerative braking
  • Quieter and cleaner operation in densely populated areas

An example of a regional route would be delivering containers from the Port of Los Angeles to the Los Angeles Transportation Center Intermodal Facility (LATC). The LATC is where containers are loaded onto trains, and is located roughly 28 miles away.

With a round trip totaling nearly 60 miles, an electric semi with a range of 200 miles could feasibly complete this route three times before needing a charge. The truck could be charged overnight, as well as during off hours in the middle of the day.

Hydrogen for Long Hauls?

We’ve covered the differences between battery and hydrogen fuel cell vehicles in the past, but this was from a passenger car perspective. The conclusion, in that case, was that battery electric has become the dominant technology. In terms of long-haul trucking, however, hydrogen may have an edge.

If we look at what will become mainstream, probably for smaller mobility it will be EVs, and fuel cells for larger mobility. That is the conclusion so far.
-Toshihiro Mibe, CEO, Honda

There are several reasons for why hydrogen could be beneficial for delivering heavy cargo over long distances. These are listed below:

  • Refueling a hydrogen fuel cell takes less time than recharging a battery. Note, however, that charge times are still improving.
  • A fuel cell configuration is typically lighter than an equivalent battery pack. Less drivetrain weight translates to a higher cargo capacity.
  • Hydrogen-powered trucks could achieve a much higher range.

This last point hasn’t been proven yet, but we can reference Nikola, which is developing hydrogen-powered semi trucks. The company has two models in the works, which are the Tre FCEV with a range of 500 miles, and the Two FCEV with a range of 900 miles.

Keep in mind that these numbers are once again estimates and that Nikola has been accused of fraud in the past.

Who’s Using Electric Semi Trucks Today?

Although there are very few models available, electric semi trucks are indeed being used today.

In January 2020, Anheuser-Busch announced that it had received its 100th 8TT. The 8TT is produced by China’s BYD Motors and was one of the first electric semis to see real-world application. The brewing company uses its 8TTs to deliver products to retail destinations across California (e.g. grocery stores).

Another U.S. company using electric semis is Walmart. The retailer is trialing both the eCascadia from Freightliner and the Tre BEV from Nikola. The trucks are being used to pick up cargo from suppliers and then deliver it to regional consolidation centers.

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Electrification

Visualizing 10 Years of Global EV Sales by Country

This infographic charts the exponential growth of EV sales by country over the last decade.

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ev sales by country

10 Years of EV Sales by Country

In 2011, around 55,000 electric vehicles (EVs) were sold around the world. 10 years later in 2021, that figure had grown close to 7 million vehicles.

With many countries getting plugged into electrification, the global EV market has seen exponential growth over the last decade. Using data from the International Energy Agency (IEA), this infographic shows the explosion in global EV sales since 2011, highlighting the countries that have grown into the biggest EV markets.

The Early EV Days

From 2011 to 2015, global EV sales grew at an average annual rate of 89%, with roughly one-third of global sales occurring in the U.S. alone.

YearTotal EV SalesCAGR
201155,414-
2012132,013138.2%
2013220,34366.9%
2014361,15763.9%
2015679,23588.0%
Total sales / Avg growth1,448,16289.3%

In 2014, the U.S. was the largest EV market followed by China, the Netherlands, Norway, and France. But things changed in 2015, when China’s EV sales grew by 238% relative to 2014, propelling it to the top spot.

China’s growth had been years in the making, with the government offering generous subsidies for electrified cars, in addition to incentives and policies that encouraged production. In 2016, Chinese consumers bought more EVs than the rest of the world combined—and the country hasn’t looked back, accounting for over half of global sales in 2021.

EV Sales by Country in 2021

After remaining fairly flat in 2019, global EV sales grew by 38% in 2020, and then more than doubled in 2021. China was the driver of the growth—the country sold more EVs in 2021 than the rest of the world combined in 2020.

Country2021 EV Sales% of Total
China 🇨🇳3,519,05451.7%
U.S. 🇺🇸631,1529.3%
Germany 🇩🇪695,65710.2%
France 🇫🇷322,0434.7%
UK 🇬🇧326,9904.8%
Norway 🇳🇴153,6992.3%
Italy 🇮🇹141,6152.1%
Sweden 🇸🇪138,7712.0%
South Korea 🇰🇷119,4021.8%
Netherlands 🇳🇱97,2821.4%
Rest of Europe 🇪🇺 469,9306.9%
Rest of the World 🌍 313,1294.6%
Total6,809,322100.0%

China has nearly 300 EV models available for purchase, more than any other country, and it’s also home to four of the world’s 10 largest battery manufacturers. Moreover, the median price of electric cars in China is just 10% more than conventional cars, compared to 45-50% on average in other major markets.

Germany, Europe’s biggest auto market, sold nearly 700,000 EVs in 2021, up 72% from 2020. The country hosts some of the biggest EV factories in Europe, with Tesla, Volkswagen, and Chinese battery giant CATL either planning or operating ‘gigafactories’ there. Overall, sales in Europe increased by 65% in 2021, as evidenced by the seven European countries in the above list.

The U.S. also made a comeback after a two-year drop, with EV sales more than doubling in 2021. The growth was supported by a 24% increase in EV model availability, and also by an increase in production of Tesla models, which accounted for half of U.S. EV sales.

Tesla’s Dominance in the U.S.

Tesla is the world’s most renowned electric car company and its dominance in the U.S. is unmatched.

Between 2011 and 2019, Tesla accounted for 40% of all EVs sold in the United States. Furthermore, Tesla cars have been the top-selling EV models in the U.S. in every year since 2015.

EV Model2021 Sales% of 2021 U.S. EV Sales
Tesla Model Y*185,99429.5%
Tesla Model 3*147,46023.4%
Ford Mustang Mach-E27,1404.3%
Chevy Bolt EV/EUV24,8283.9%
Volkswagen ID.416,7422.7%
Tesla Model S*15,5452.5%
Nissan Leaf14,2392.3%
Porsche Taycan9,4191.5%
Tesla Model X*7,9851.3%
Audi e-tron7,4291.2%

*Estimates
Share of total sales calculated using total U.S. EV sales of 631,152 units, based on data from the IEA.
Source: Cleantechnica

Tesla accounted for over 50% of EV sales in the U.S. in 2021 with the Model Y—launched in 2019—taking the top spot. Furthermore, the Model Y remained the bestselling EV in the first quarter of 2022, with Tesla taking up a massive 75% of the EV market share.

Despite Tesla’s popularity, it could face a challenge as other automakers roll out new models and expand EV production. For example, General Motors aims to make 20 EV models available by 2025, and Ford expects to produce at least 2 million EVs annually by 2026. This increase in competition from incumbents and new entrants could eat away at Tesla’s market share in the coming years.

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