Will High Demand For Electric Cars Make Nickel Investors Rich?

A few months ago Tesla replaced the old 18650 battery pack with a bigger and better 2170 battery in its electric cars with high demand, like the Tesla Model 3. The older 18650 cells contain a combination of lithium-Nickle-Cobalt-Aluminium metals, while the newer 2170 battery contains Nickle-Manganese-Cobalt at a ratio of 8:1:1. The amount of nickel used in these cells has been increased.

The new cells were earlier produced by Panasonic in Japan; now they are produced at the Tesla Gigafactory in Nevada. The 2170 cells have 50% more internal volume which results in 50% more storage capacity and an increased energy density per pack in electric cars. Meaning more range despite the smaller battery pack.

This was the reason which made the new Model 3 such a popular electric car in multiple countries, including Norway, Australia, Canada, and the United States. The Long Range version of the Tesla Model 3 is particularly high in demand among consumers.

And since the popularity of all types of electric cars is on the rise, the subsequent demand for Nickle is also expected to see a huge boom. So is it the right time to invest in the metal for a potential boom in the near future? A new report from the Wall Street Journal analyses the same.

High Demand for Electric Cars To Surge Nickel Prices?

Currently, a huge portion of Nickle is used in making Stainless Steel whose industry takes up to 70% of total Nickle supply. Other major industrial applications that require Nickle usage include electroplating, making nonferrous alloys, etc.

However, demand for nickel ore has been steadily increasing since electric cars became mainstream, courtesy of companies like Tesla. And since there’s a growing market, every major automaker wants a piece of the pie. There’s almost one electric car coming from every major manufacturer in the next year. With almost 200 new launches lined up for 2023 says the report.

The rise in nickel prices is also aided by an export ban from Indonesia that seeks to disrupt the global nickel supply chain. Recent flooding on Sulawesi Island in Indonesia has pushed its government to prepone a Nickleore export ban, earlier slated for 2022.

Indonesia will now stop sending nickel ore to other countries that are its major markets like China. Instead, Indonesia seeks to become the biggest supplier of Nickle and an EV manufacturing hub in the South Asia region.

However, this export ban combined with the rise in EV is good news for BHP Group Ltd, a multinational mining company based in Australia. The report says that the company was in financial trouble a few years ago, but with the surge in popularity of EVs, almost 2,000 mining jobs have been saved.

Still, even this data isn’t a reliable indicator of whether the current surge in nickel prices will remain a constant. Some reports suggest that the Philippines will take up the duty to supply nickel worldwide. The country is also the second-largest supplier of nickel in the region.

On the flip side, experts claim that the quality of nickel ore from the Philippines is less compared to the Indonesian one and that the miners won’t be able to fill in the supply gap.

The industry usually responds to global supply chain disruption by innovation. For example, in order to counter the wrath of US-China trade war, Apple recently shifted part of its production to from China to India.

Similarly, stainless steel and battery makers will most likely come up with their own ideas to counter the nickel ore shortage.

The price of nickel has always been volatile, says the WSJ report. According to analysts, innovation in battery technology will likely bring the price of nickel down in the long term.