My other article in this month’s issue of PowerTALK News describes how home battery systems, even though they are not themselves viable products for most consumers, still benefit from a virtuous cycle of product improvement and investment because of the relative success of battery-powered vehicles and other battery-powered products.
But the COVID-19 pandemic has not missed those drivers. Venture Beat magazine reports that investors are largely avoiding lithium this year, preferring to safeguard cash until the economy starts to improve. The delay in funding could have several knock-on effects.
One is consolidation in the industry. Ganfeng Lithium is picking up a lithium project from Lithium Americas, a smaller operation. Fewer, larger players in the market later on might have price consequences for lithium adoption after the economy improves and demand for those goods increases.
When the primary barrier to adoption of these goods is the cost of the battery (both at initial purchase and at replacement), consolidation in the raw materials market could have a serious impact on demand for finished goods.
Perhaps the bigger concern is that assets will go unused and possibly leave the market with bankruptcies, and resources will go undeveloped. Some industry actors warned that these impacts could affect the market through the middle of the decade.
Source: Venture Beat Read The Article
PSR Analysis: These factors may bring the industry to a place where regulations in Europe and China are what drive adoption by simply crowding out fossil-fuel-powered cars. That situation may lead to some concern about stalling improvements in the technology (If consumers have to buy your product, why spend money improving it?), but the US market seems unlikely to adopt as-aggressive regulations about vehicle emissions or subsidies for battery-powered vehicles.
Given that adoption in the U.S. beyond enthusiastic early-adopters will depend largely on technology and price improvements, it seems likely that progress will continue, even if it is delayed by pandemic disruptions.
In the May 2020 issue of PowerTALK News, we discussed reports that electric vehicle manufacturers might need to buy direct control of their lithium mines to secure a stable supply chain that would be resilient to the price and market concerns laid out in this article. We will be watching to see if those players make any moves to secure mining operations while the market favors buyers of those assets. PSR
Tyler Wiegert Is Project Manager and Power Systems Analyst
