Released May 23, 2024 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Despite declining materials costs for clean energy technologies like electric vehicles (EVs), retail prices for those vehicles have not fallen, and the tariffs just announced by the Biden administration may push up the costs of those vehicles even further, according to a subject-matter expert at Industrial Info Resources.
Most of the critical minerals used to build EV batteries, solar photovoltaic (PV) arrays, wind turbines and electrolyzers, have ended a multi-year price rise and returned to the levels prior to the COVID-19 pandemic, the International Energy Agency (IEA) (Paris, France) agency said it its 282-page report, Global Critical Minerals Outlook 2024, released May 17.
The spot price of lithium, a critical mineral used to make EV batteries, plummeted about 75% last year, the IEA said. Last year, the prices of cobalt, manganese, nickel and graphite fell between 30% and 45%--helping drive battery prices 14% lower.
Click on the image at right to see a graphic on recent price trends for critical minerals.
Declining input costs and growing scale has pushed down by about 75% the average price per kilowatt-hour (KWh) of an EV lithium-ion battery pack price over the last decade, from nearly $800 per KWh in 2013 to about $175 per KWh in 2023.
The declining price trend for EV batteries is mirrored in other clean energy technologies, such as solar panels, wind turbines and storage batteries, the IEA report found.
The Global Critical Minerals Outlook 2024 report noted sharp year-over-year gains in deployment of some clean energy technologies such as solar PV, wind farms, EVs and electrolyzers, which are used to split water into hydrogen and oxygen so the hydrogen can be used to generate electricity without emissions.
One outlier to this downward price trend is copper, another critical mineral used in EVs as well as electric transmission & distribution (T&D) lines. Copper prices have been on a multiyear tear: the current price of slightly over $5 per pound is more than double its low of about $2.25 per pound just before the pandemic hit.
EVs require three to five times as much copper as conventional internal combustion engine (ICEs). And many countries, not just the U.S., are planning a significant expansion of their T&D networks as part of the drive to electrify transportation, expand the use of renewables and replace or rebuild aging electric lines. So high-priced copper may negate or offset some of the decline in other minerals.
Demand for refined copper increased by 2.7% in 2023, up from 0.9% in 2022, the IEA report said, adding that the growth was almost entirely driven by growing consumption in China and India. Demand in other regions registered a modest decline. The growth in China was predominantly underpinned by copper uses in construction and electricity networks, a trend expected to persist in the coming years.
Limited growth in mined copper is anticipated for 2024, the agency predicted. However, in 2025 and 2026, several new projects and expansion plans are expected to ramp up, which could add volumes assuming these projects move forward according to their plans.
For more on the IEA report's assessment of upstream trends in mining critical minerals, see May 17, 2024, article - IEA: Price of Most Critical Minerals Fell in 2023, but Concerns Arise.
David Pickering, Industrial Info's vice president of research for Industrial Manufacturing, pointed out that EV prices have not come down to reflect their falling critical materials costs. "EV pricing is a very dynamic and interesting mix," he said in an interview. "Retail prices are not dropping to reflect declining input costs, at least not yet. In addition, the tariffs just announced by the Biden administration probably will raise the costs of components as well as possibly even critical minerals as well."
For more on the Biden administration tariffs, see May 17, 2024, article - Biden Administration Announces 25% Tariff on Chinese Steel Imports.
Pickering added that the still-nascent network of EV chargers, plus consumers' generally sour outlook for the economy, are limiting factors to electrified transportation in the U.S. Last year, about 1.4 million EVs were sold domestically, a record but well below what prognosticators had expected.
Another unknown for EV prices, as well as the costs for solar and wind farms, is the strong demand growth for critical minerals forecast by the IEA is not, as yet, being matched by grassroot mining projects or mining expansions. The IEA's report said major additional investments are still needed to meet what is expected to be sharp increases in demand as companies and countries seek to limit temperature gain by lowering emissions of carbon dioxide (CO2).
The IEA report does not include price projections for EVs or constructing solar PV or wind generation facilities. But it uses one of its climate change scenarios, net-zero carbon emissions by 2050, to project demand for critical minerals through 2040. It also looks forward and explores four clusters of risks around the availability of critical minerals in the coming decades.
First, the agency projects demand will soar for all of the critical minerals through 2040. Global demand for copper in 2040 is expected to surge to 1.5 times what it was in 2023.
Worldwide demand for lithium is expected to skyrocket to 8.7 times its 2023 demand. Demand for nickel, cobalt, graphite and rare earth minerals are expected to grow faster than copper but less than lithium.
Sharply rising demand for these minerals led the IEA to construct a mineral-specific clean energy transition risk assessment framework that looks at four clusters of risks:
Overall, the IEA said lithium and graphite were the transition minerals with the greatest overall level of risk, though each mineral faced a different mix of risks. This is another reason why the agency has urged a diversification of supply chains, to manage risks.
The agency warned against assuming future transition minerals will continue last year's downward trajectory. Sharp declines in mineral prices last year hurt the financial performance of mining companies. Thus, the agency urged policymakers, industry and consumers to take action in four focus areas to promote reliable and sustainable supplies of critical minerals:
Most of the critical minerals used to build EV batteries, solar photovoltaic (PV) arrays, wind turbines and electrolyzers, have ended a multi-year price rise and returned to the levels prior to the COVID-19 pandemic, the International Energy Agency (IEA) (Paris, France) agency said it its 282-page report, Global Critical Minerals Outlook 2024, released May 17.
The spot price of lithium, a critical mineral used to make EV batteries, plummeted about 75% last year, the IEA said. Last year, the prices of cobalt, manganese, nickel and graphite fell between 30% and 45%--helping drive battery prices 14% lower.
Declining input costs and growing scale has pushed down by about 75% the average price per kilowatt-hour (KWh) of an EV lithium-ion battery pack price over the last decade, from nearly $800 per KWh in 2013 to about $175 per KWh in 2023.
The declining price trend for EV batteries is mirrored in other clean energy technologies, such as solar panels, wind turbines and storage batteries, the IEA report found.
The Global Critical Minerals Outlook 2024 report noted sharp year-over-year gains in deployment of some clean energy technologies such as solar PV, wind farms, EVs and electrolyzers, which are used to split water into hydrogen and oxygen so the hydrogen can be used to generate electricity without emissions.
One outlier to this downward price trend is copper, another critical mineral used in EVs as well as electric transmission & distribution (T&D) lines. Copper prices have been on a multiyear tear: the current price of slightly over $5 per pound is more than double its low of about $2.25 per pound just before the pandemic hit.
EVs require three to five times as much copper as conventional internal combustion engine (ICEs). And many countries, not just the U.S., are planning a significant expansion of their T&D networks as part of the drive to electrify transportation, expand the use of renewables and replace or rebuild aging electric lines. So high-priced copper may negate or offset some of the decline in other minerals.
Demand for refined copper increased by 2.7% in 2023, up from 0.9% in 2022, the IEA report said, adding that the growth was almost entirely driven by growing consumption in China and India. Demand in other regions registered a modest decline. The growth in China was predominantly underpinned by copper uses in construction and electricity networks, a trend expected to persist in the coming years.
Limited growth in mined copper is anticipated for 2024, the agency predicted. However, in 2025 and 2026, several new projects and expansion plans are expected to ramp up, which could add volumes assuming these projects move forward according to their plans.
For more on the IEA report's assessment of upstream trends in mining critical minerals, see May 17, 2024, article - IEA: Price of Most Critical Minerals Fell in 2023, but Concerns Arise.
David Pickering, Industrial Info's vice president of research for Industrial Manufacturing, pointed out that EV prices have not come down to reflect their falling critical materials costs. "EV pricing is a very dynamic and interesting mix," he said in an interview. "Retail prices are not dropping to reflect declining input costs, at least not yet. In addition, the tariffs just announced by the Biden administration probably will raise the costs of components as well as possibly even critical minerals as well."
For more on the Biden administration tariffs, see May 17, 2024, article - Biden Administration Announces 25% Tariff on Chinese Steel Imports.
Pickering added that the still-nascent network of EV chargers, plus consumers' generally sour outlook for the economy, are limiting factors to electrified transportation in the U.S. Last year, about 1.4 million EVs were sold domestically, a record but well below what prognosticators had expected.
Another unknown for EV prices, as well as the costs for solar and wind farms, is the strong demand growth for critical minerals forecast by the IEA is not, as yet, being matched by grassroot mining projects or mining expansions. The IEA's report said major additional investments are still needed to meet what is expected to be sharp increases in demand as companies and countries seek to limit temperature gain by lowering emissions of carbon dioxide (CO2).
The IEA report does not include price projections for EVs or constructing solar PV or wind generation facilities. But it uses one of its climate change scenarios, net-zero carbon emissions by 2050, to project demand for critical minerals through 2040. It also looks forward and explores four clusters of risks around the availability of critical minerals in the coming decades.
First, the agency projects demand will soar for all of the critical minerals through 2040. Global demand for copper in 2040 is expected to surge to 1.5 times what it was in 2023.
Worldwide demand for lithium is expected to skyrocket to 8.7 times its 2023 demand. Demand for nickel, cobalt, graphite and rare earth minerals are expected to grow faster than copper but less than lithium.
Sharply rising demand for these minerals led the IEA to construct a mineral-specific clean energy transition risk assessment framework that looks at four clusters of risks:
- Supply
- Geopolitical
- Barriers to respond to disruption risks and
- Exposure to ESG and climate.
Overall, the IEA said lithium and graphite were the transition minerals with the greatest overall level of risk, though each mineral faced a different mix of risks. This is another reason why the agency has urged a diversification of supply chains, to manage risks.
The agency warned against assuming future transition minerals will continue last year's downward trajectory. Sharp declines in mineral prices last year hurt the financial performance of mining companies. Thus, the agency urged policymakers, industry and consumers to take action in four focus areas to promote reliable and sustainable supplies of critical minerals:
- Invest in a diversified supply
- Accelerate efforts to recycle, innovate and change consumer behavior
- Take steps to improve market transparency, and
- Ensure that future supplies of critical minerals are developed sustainably and responsibly
