Since electric cars with massive battery packs emerged, people ask where we will get enough cells for them. It was already a concern before a pandemic, a semiconductor shortage, and Vladimir Putin dragging Russia into a senseless invasion against Ukraine. Circular Energy Storage presented more effects to that scarcity than we ever imagined.
When anything is in short supply, prices go up. In a way, it is like an auction: those willing to pay more get precedence. That demand for copper, nickel, cobalt, and manganese made battery prices rise. That means that electric cars are either more expensive or have less content not to have a higher price.
Tesla has followed both ways. Its cars have had several price increases and lost content. The most famous cases are the loss of radar and electric control unit of the power steering in vehicles made in China. We are not aware of similar movements with other EV makers so far.
In the past, people were just concerned about getting more sources for nickel, cobalt, and manganese. With more demand for electric cars, lithium has also become a problem. According to Circular Energy Storage, the prices for lithium carbonate have increased 900%, and the metal is now the most expensive element of all battery chemistries apart from LCO.
The immediate effect is that battery recyclers are now paying way more for material for recycling than they paid in the past. Even LFP (lithium iron phosphate) cells became a precious asset due to their lithium content. That makes used electric cars appreciate.
According to Circular Energy Storage, a 2012 Tesla Model S cost $31,350 in 2021. Nowadays, the same car can only be bought if you pay $36,500. A 2011 Nissan LEAF used to be sold in the U.S. in 2021 for $5,450. Now, you can only get one if you disburse $7,628. That is also happening in other markets such as the UK. The same LEAF was sold for £6,580 one year ago. Its price is now at £8,800.
That has more effects than making used electric cars more or less affordable. It also impacts insurance. If you crashed a used EV one year ago, the bill to repair it could exceed the amount that made it something worth saving. That said, this old electric car would turn into junkyard material, and its batteries could be bought by cell recyclers.
With the higher value these vehicles attained, such a repair could now make sense. That means that these older electric vehicles will remain working for much more time than before, increasing the pressure for new sources of raw materials. EVs with only a little range left may become a good option for those with short commutes and where to charge these cars at work and home.
On the other hand, if a perfectly fine EV has an issue with its battery pack, it will also be more expensive to get a replacement. Cars that are still under warranty will have them replaced for free. However, automakers will have to pay more for the battery pack that will replace the defective component. If the warranty is already over, it is a lot less likely that the affected customer will have the money to buy a new battery pack. If they do, it may not make sense to replace it.
In that scenario, cell recyclers will get more material to work with, but we’ll also have more cars ending up in junkyards, with a lot of material waste with what can’t be recycled in them. That will also demand people to buy new vehicles, increasing the pressure to get more raw materials. In other words, World Overshoot Day will be anticipated even more.
As we have written before, that makes the business model Tesla championed when it presented the original Roadster be a real problem for those that claim to buy EVs to save the planet. People may start to wonder if it would not be cleaner to keep combustion engines running with renewable fuels if the concern is restricted to emitting fossil carbon. Clean transportation includes way more than that, and raw material scarcity makes it even clearer.