EV demand is impacting the battery metals market

The prices of metals used in batteries are declining, and lower-than-expected EV demand may be the culprit. According to data reported by the WSJ:

• The price of lithium carbonate – a raw material in batteries – fell 70% in 2023
• The price of cobalt dropped 25%
• Nickel prices decreased 45%

The reason for this drop is right out of Econ 101. When supply goes up and demand goes down, prices tend to mirror demand and decrease. And that’s what’s happening here.

Metal producers in recent years have ramped up new projects in order to supply the burgeoning EV industry – but EV demand from consumers has come in below expectations, leaving many of these producers in an unprofitable position, the WSJ reports. The result: lithium and nickel projects are increasingly being paused. Swiss mining and trading giant Glencore recently announced plans to suspend production at an unprofitable nickel mine and processing plant that provides more than 6% of the world’s supply.

Lower-than-expected EV demand is also impacting legislation. The Biden administration will reportedly soon ease vehicle-emission requirements through 2030 at the urging of automakers and the UAW, who say EV tech is still too costly for many mainstream consumers and that more time is needed to develop a charging infrastructure.