Falling Lithium Prices Are Making Electric Cars More Affordable

Even after falling so much, lithium prices remain so high that mining and processing the metal is an unusually profitable business. The metal, uniquely suited for batteries because of its ability to store energy, costs from about $5,000 to $8,000 per ton to produce. It sells for 10 times that amount, according to Mobility Impact Partners, a private equity firm based in New York that invests in the electric vehicle industry, among other areas.

Given those fat profit margins, investors and banks are eager to invest in, or lend to, mining and processing projects. The federal government is awarding grants worth tens of millions of dollars to lithium prospectors and processors.

“You can’t have profit margins that are 10 times what it costs to extract,” said Shweta Natarajan, a partner at Mobility Impact who has analyzed the lithium market. “You will see that come down.”

“Financing is very easy to come by,” Ms. Natarajan added. “There is no reason to think you wouldn’t have new projects opening up to meet any shortages.”

But others, including members of the Biden administration, are less confident. The supply of lithium has to increase by 42-fold by 2050 to support a transition to clean energy, said Jose W. Fernandez, the under secretary for economic growth, energy and the environment at the State Department.

“We have to find additional sources of supply because 42 times is a lot,” Mr. Fernandez said in an interview. “Right now, we don’t have enough.”

Article source: https://www.nytimes.com/2023/03/20/business/lithium-prices-falling-electric-vehicles.html