An increase in graphite prices may soon become a challenge for manufacturers of electric vehicles since this would affect the production of lithium-ion batteries. The batteries serve as the power source of electric vehicles, similar to the kind used for mobile devices. The potential increase in prices mainly stems from a shortage of supply over the next ten years, when the global supply is expected to fall short of several million tonnes per year during the same period.
Demand for Electric Cars
By 2025, there would be 7 million cars on U.S. roads from just 567,000 units in 2016. This massive increase derives from the sustainability of owning an electric vehicle. Most people also switch because of rising gas prices. However, this projected increase highlights the country’s output grid capacity.
Some experts believe that there should be a bigger electric supply before manufacturers produce more cars, despite the growing demand for such vehicles. While concerns about electric supply are valid, the cost of graphite seems a more pressing issue in the near future for manufacturers.
A Benchmark Minerals Intelligence report showed that lithium-ion batteries will be more in-demand than ever for the second half of 2018. Manufacturers should expect prices to increase further, especially with the government’s tariffs on graphite imports.
A good example of supply constraints could be determined with the global production. Graphite-producing mines yield an estimated 1.2 million tonnes every year. Batteries for electric cars only account for up to 20% of those since manufacturers require the purest form of graphite by as much as 99.99%.
Electric car manufacturers should consider keeping a close watch on graphite prices, which is possible by simply subscribing to a market intelligence provider. Real-time information will be crucial to find out the costs and available supply while preparing for market fluctuations.