We need more nickel mines, or the electric vehicle market will face a supply crunch by the mid-2020s.

That’s the call from consultancy Wood Mackenzie, which has put out another edition of its half-yearly look into the supply side of the electric vehicle market.

Despite being one of the main gainers on commodity markets this year, report author Gavin Montgomery said its low price was putting off new mine development.

“Although the battery sector share of nickel demand is much smaller than other metals, getting the quantity of nickel that EVs will need by the mid-2020s will be a challenge,” he wrote.

“A low nickel price has hindered any project development and with lead times often up to 10 years, investment needs to happen now.

“While high-nickel ternary batteries will mean higher corresponding demand for nickel, like cobalt, our long-term deficits are becoming more feasible.”

READ: Is nickel back? Look at this pricing chart…

But in a weird twist, the current low price of the metal is causing battery manufacturers to create more batteries with higher nickel content to offset the higher price of other battery minerals — creating even more demand side.

Battery manufacturers have sounded the alarm on nickel supply before.

For example Chinese company Pulead Technology Industry Company has said it expects batteries with more nickel content to become more popular.

There’s still only a few cathodes with nickel content above 60 percent, but its use will grow in the next decade,” Pulead’s chief executive officer, Yuan Gao, has previously said.

“Nickel supply is what concerns me the most.

“With the strong growth of the EV industry, there are lots of investments in Indonesia in order to develop projects, but it takes time to go with this route.

“And I don’t know if we have much time left.”


This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.