According to Morgan Stanley, the spike in lithium carbonate pricing would force electric vehicle battery companies to boost prices by about 25%, squeezing profits and perhaps destroying demand.
Increasing expenses may force manufacturers to boost prices by as much as 15%, reducing demand.
Chinese lithium giants see revenue growth
For so many years, “the battery cost curve has historically been dropping at a pace of 3% to 7% per year for so many years that it appeared virtually inevitable,” the analysts write.
Prices for lithium carbonate spiked as demand from cars exceeded supply, suggesting that the energy revolution might be hindered by a lack of ingredients and processing capacity.
According to Morgan Stanley, most battery companies in China, which leads the lithium-ion battery business, acquire materials on the spot market rather than through contractual arrangements.