By Annie Lee | Published in Bloomberg September 16, 2022
The surge in prices of lithium, the key battery material used to power electric cars, is seemingly unstoppable. Lithium carbonate hit a fresh record of 500,500 yuan ($71,315) a ton in China Friday, according to data from Asian Metal Inc. Prices more than tripled in the past year, inflating the cost of batteries used in electric vehicles, with recent gains driven by strong demand and disruptions at a domestic producing hub.
Consumer support for new-energy vehicles has been gathering pace amid a global transition away from fossil fuels. The China Passenger Car Association has raised its forecast for sales of EVs to a record 6 million this year, double the total in 2021, while battery usage in the nation is also expected to almost double, according to Bloomberg Intelligence.
Meanwhile, a power crunch during August in Sichuan province — home to more than one-fifth of China’s lithium production — caused two weeks of electricity cuts, hampering supply in an already-squeezed market.
“EV production and sales have held steady in recent months,” according to Rystad Energy, a research firm, which added there are concerns over whether China’s power crisis could return this winter when demand for heating rises. “This could lead to new power shortages and hit lithium operations,” it wrote, expecting prices to stay firm around this level through to the end of the year.