As US gas prices hit record highs in the wake of Russia’s invasion of Ukraine, it seems electric vehicles are not a safe haven for those looking to save money. That’s because Russia plays a major role in producing the nickel that ends up in batteries used by many electric vehicles — a metal that increased in price even faster than oil.
On Feb. 25, nickel traded on the London Metal Exchange at about $24,000 a ton, according to The Wall Street Journal† On March 8, it stood at $80,000 (after peaking at over $100,000), and the London Metal Exchange had suspended trading. There are a few reasons for the huge price hike – because it’s 2022, there are financial shenanigans involved, but it is also impossible for the market to ignore the fact that a major nickel producer is at war and facing a wave of international sanctions.
The current rise in the nickel price is by far the largest one-day rise ever of the six base metals (nickel, tin, copper, aluminum, zinc, lead) traded on the London Metal Exchange pic.twitter.com/m9ZqdTcBM6— Nat Bullard (@NatBullard) March 7, 2022
When it comes to mining nickel, Russia is not a big player. According to the WSJ, the country supplies up to 6 percent of the world’s nickel. (For context, that puts it a distant third behind Indonesia and the Philippines, according to a US Geological Survey datasheet (pdf).) But Russia’s role in producing the battery-grade nickel used in EVs is another story – in a Twitter thread breaking down the problemBenchmark Mineral Intelligence’s CEO says 20 percent of that supply comes from a single Russian company.
Norilsk in total accounts for 7% of all nickel reserves. But electric car manufacturers, car OEMs and battery cell manufacturers will be terrified of losing 20% of a market with prices that have been high for a decade.— Simon Moores (@sdmoores) February 24, 2022
Car manufacturers are of course aware of the scarcity of nickel. Tesla CEO Elon Musk tweeted in late February that the EV company plans to move its standard cars for distances from nickel-hungry lithium-ion battery cells. He called nickel the company’s “biggest scaling concern” and said Tesla will move to iron cathode technology, but it’s hard to say how long that process will take. It also doesn’t help with the more desirable long-range models. According to Bloomberg and Reutersnickel prices became a problem for EV manufacturers even before the invasion.
(Last week, Musk also tweeted that the world needed to produce more oil and gas to make up for what it got from Russia.)
It’s not impossible to make batteries without nickel — Volkswagen and other automakers are exploring other battery technologies that don’t use it or cobalt (the price of which has also risen), according to Reuters†
But, like energy policy, battery production and integration is a big ship for automakers to turn around – if prices of nickel and other metals remain high, it will be a race to switch to other technology before the shockwaves hit. of higher prices and sanctions find their way through the supply chain. If automakers don’t switch quickly, electric cars could be pushed even further out of reach for most Americans, at a time when gas prices make them look better than ever.