Like us gasoline prices hit record highs in the wake of Russia’s invasion of Ukraine, it seems electric vehicles aren’t a safe haven for those looking to save money. This is because Russia plays an important role in the production of nickel which is found in the batteries used by many electric vehicles – a metal which is the price skyrocketed even faster than oil.
On February 25, nickel was trading on the London Metal Exchange for around $24,000 a ton, according to The Wall Street Journal. On March 8, it was trading at $80,000 (from a high of over $100,000), and the London Metal Exchange suspended trade. There are several reasons for the massive 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.
Today’s nickel price action is by far the biggest one-day increase ever for 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 nickel mining, Russia is not a major player. According to WSJ, the country provides up to 6% of the world’s nickel. (For context, that puts it a distant third behind Indonesia and the Philippines, according to a U.S. Geological Survey datasheet (pdf).) But Russia’s role in producing the battery-grade nickel used in electric vehicles is another story – in a Twitter thread breaking down the issuethe CEO of Benchmark Mineral Intelligence claims that 20% of this supply comes from a single Russian company.
Norilsk globally accounts for 7% of the entire nickel supply. But EV makers, automotive OEMs and battery cell producers will be terrified of losing 20% of a market whose prices have already hit decade highs.
—Simon Moores (@sdmoores) February 24, 2022
Car manufacturers are of course aware of the scarcity of nickel. Elon Musk, CEO of Tesla, tweeted at the end of February that the EV company plans to move its standard remote cars away from nickel-guzzling lithium-ion battery cells. Calling nickel the company’s “biggest scaling concern,” he said Tesla would transition 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 were already becoming an issue for EV makers even before the invasion.
(Last week, Musk also tweeted that the world needed to produce more oil and gas to make up for what he got from Russia.)
It is not impossible to make nickel-free batteries – Volkswagen and other automakers are study other battery technologies that do not use it or cobalt (the the price of which has also increased), according to Reuters.
But, like energy policy, battery production and integration is a big ship for automakers – if the nickel and other metal prices stay up, it will be a race to switch to other technologies before the shockwaves of rising prices and sanctions work their way through the supply chain. If automakers don’t make the switch soon, it could put electric vehicles even further out of reach for most Americans, at a time when gas prices are making them look better than ever.