If you think owning an electric vehicle (EV) will be beneficial since it doesn’t need to be filled up with gas, think again. Nickel is a key ingredient in lithium-ion batteries that are powering most EVs today, and Russia is one of the world’s major suppliers of the aforementioned metal element. Unsurprisingly, due to sanctions placed on the Russian economy, nickel prices have also surged.
According to CNBC, nickel prices have soared above $100,000 per metric ton amid Russia’s invasion of Ukraine. Automakers have been using nickel to the cathode as a way to increase battery density, thus increasing its range when fully charged. With this surge in nickel prices, expect the prices of EVs to also increase, particularly higher-end ones that use a lot of nickel.
In contrast, more affordable electric vehicles use a battery with lithium iron phosphate (LFP), which does not have nickel or cobalt in its cathode. Its drawback, however, is less range. Tesla uses these kinds of batteries on their lower-end models to drive down costs.
Morgan Stanley auto analyst Adam Jonas said on Monday: “As of this writing, nickel is up 67.2 percent just today, representing around a $1,000 increase in the input cost of an average EV in the U.S.” Lithium-ion batteries with a high nickel content offers plenty of advantages for electric vehicles, especially in terms of range, but even before the Russian invasion of Ukraine, the price of nickel was already up due to the surge in demand for EVs as the economy recovered from the effects of the pandemic.
The increase in prices in nickel could mark a shift by automakers switching to LFP batteries to lower production costs. For high-end EVs such as the Porsche Taycan or BMW iX that offer greater performance and/or range, they might continue sticking to lithium-ion batteries with high nickel content, thus increasing their prices.