Regulations on carbon emissions are becoming stricter across
the world and will contribute to the rise in electric vehicle
(EV) production in the coming decades, sources said in June
at Fastmarkets’ 11th Lithium Supply &
Markets Conference in Santiago, Chile.
At the same time, government funding for automotive
manufacturers’ EV efforts is fading, with the most
obvious example being in China, sources said.
"Chinese subsidies have so far been equal to, or surpassed,
production costs, but from next year… they will be
minimal to none," the chief executive officer for
electrochemical cathode materials producer Pulead Technology
Industry, Yuan Gao, said at the conference.
And subsidies will soon be a thing of the past, according to
Adam Panayi, managing director at research firm Rho Motion.
"As EVs move to mass production, and while governments face
fiscal constraints, subsidies cannot last long outside of
China," he said. "Governments will achieve more with
Most EV producers in China will struggle to make a profit
following the decline in subsidies, the principal consultant
for ESK Consulting, Jaime Alée, said. For now, the
companies intend to increase the EV share of the car market
while generating losses most of the time.
The China 6 emissions regulation is a clear example of a
government pushing for environmentally friendlier solutions in
the vehicle industry via legislation. This new regulation will
further cut the maximum carbon and nitrogen oxide emissions per
unit and will be implemented in two phases - the first in July
2020 and the second in July 2023.
"The China 6 requirements are going to be more difficult to
meet than the latest Euro 6 [regulations], which were already
hard," Kevin Riddell, senior manager for consultancy LMC
Automotive, said. "There’s a focus on lowering
emissions all around the world, which will be nearly impossible
to achieve without electrification."
Panayi added: "Internal combustion vehicles are at the top
of what they can achieve in [terms of] emissions
Market participants believe that EV output will be the main
driver of lithium demand in the coming decades because of
lithium-ion battery usage. ESK, for example, estimates that
lithium consumption will total 382,000 tonnes in 2019, rising
to 1 million tonnes in 2025.
This comes at a time when the lithium market has been
correcting downward, following large price spikes in 2017 and
2018 when much excitement surrounded the lithium and battery
raw materials’ markets.
Fastmarkets assessed the spot price for lithium carbonate,
min 99.5% Li2CO3, battery-grade, spot price, cif China, Japan
and South Korea, at $11.00-12.50 per tonne on June 6. This was
unchanged from May 23, but narrowed downward from $11-13 per
tonne on May 16.