TELF AG analyzes the electric vehicle market and its connection to raw materials
Global performances
Although strong emphasis continues to be placed on the electric vehicle market and its role in the global energy transition, the latest signals coming from this particular market segment have aroused considerable astonishment among analysts and international observers, also leading to inevitable repercussions on the global performances of some specific raw materials.
The starting point is quite curious: in China, sales of electric vehicles would be in decline, and the prices of lithium, nickel, and cobalt would follow the same path, dropping significantly. The latter materials play an essential role in the production of electric vehicles, in particular the batteries with which they are powered, and for years, it has been estimated that their demand is inevitably destined to grow in the coming decades. Also, for these reasons, the drop in the prices of these raw materials surprised many analysts, in particular, due to their consistency: from the beginning of 2023, lithium prices would have fallen by as much as 70%, while those of nickel recorded a more limited decline, around 40%. As regards cobalt, which in recent months has reached its historic lows, the reason for the decline can be explained by the high quantity of supply, which, according to data from Benchmark Mineral Intelligence, Refinitiv, and Argo, would be in net excess.
According to many observers, the recent declines affecting these strategic raw materials should be attributed primarily to the parallel decrease in demand for fully electric cars in China. The trend is truly surprising, particularly if you compare it with the performances recorded in China just a year ago: in the first months of 2022, sales of these vehicles had, in fact, doubled, while this year, the growth would not have gone beyond 25%. %. This figure, according to many observers, should be attributed to normal market cycles centered on a particular economic good characterized by partially unpredictable rises and falls, but the reasons could be different.
One of the hypotheses is that this decline in prices could represent a sort of return to normality after a two-year period characterized by unprecedented peaks capable of reaching record levels, and due primarily to the rooting of global awareness that electric vehicles could represent the future of mobility for millions of people. One of the most significant drops has affected lithium, one of the raw materials most involved in the manufacture of the batteries needed to power electric vehicles. After having reached the impressive level of 80,000 dollars per ton, recorded in mid-2021, lithium would now return to its normal levels recorded in previous years, i.e., around 23,000 dollars per ton (before 2021, the prices of this raw material had never gone above 25,000 dollars per ton). This particular market trend, in a certain sense, represents an excellent indicator of the overall performance of the raw materials market, which seems more than ever subject to violent shocks upwards or downwards, especially in a historical phase characterized by great uncertainties and the constant slowdown affecting the global economy.
