Wall Street is aghast at Elon Musk’s dismissive attitude toward analysts’ probing following a quarter of record (but less than expected) losses for Tesla, but the electric vehicle maker did provide some answers to questions that’s been vexing the mining industry.
Benchmark Mineral Intelligence, a provider of price information and research on battery supply chains, parsed the numbers after Tesla gave a rare indication of the relative proportions of raw materials used in its latest lithium-ion battery for its Model 3.
At first blush it’s not good news for miners of cobalt, a crucial ingredient in batteries used in electric vehicles and cellphones that’s been trading near decade highs above $90,000 a tonne.
Nickel-Manganese-Cobalt (NMC) batteries favoured by most vehicle makers contain around 20% cobalt. Tesla is a proponent of nickel-cobalt-aluminium (NCA) technology which requires less than a third the amount of cobalt.
Musk said on Wednesday the cobalt content of its NCA cathode chemistry “is already lower than next-generation cathodes that will be made by other cell producers with a nickel-manganese-cobalt ratio of 8:1:1″.
Benchmark said over six years – from the Roadster to the Model 3 – the EV producer has reduced its cobalt needs by 59% on average per vehicle.
Tesla’s US rivals and Japanese, Korean and German automakers have a lot of catching up to do when it comes to thrifting which suggests cobalt producers should not lose too much sleep:
Since their inception, cathode and battery manufacturers have been working on reducing their cobalt dependency as this is the most expensive raw material input.
With NCM, a number of formulations have been developed over the last 25 years, each with a lower cobalt intensity usage than the next.
The original NCM111 material has evolved into NCM523 (5 parts nickel, 2 cobalt and 3 manganese) and more recently, NCM622 (6 parts nickel, 2 cobalt and 3 manganese).
The end game with this chemistry is to develop NCM811, to which Elon Musk’s refers to. However, this is still a number of years away from widespread commercial adoption due to lifecycle and safety concerns but will offer a lower raw material costs and improved energy density.
In fact, Benchmark only expects NCM811 to have a material impact on the lithium ion battery industry from 2022 onwards when we forecast it to account for 10% of the cathode market.
Annual production cobalt is only around 100,000 tonnes primarily as a byproduct of nickel and copper mining with more than 60% coming from the Democratic Republic of the Congo, where fears about political instability and the challenges of ethical sourcing combine to supercharge supply concerns.