EV Battery Market Faces Dual X-Factors: Soaring Nickel… | Stephens

Who We Are

What We Do

We provide investment banking, research, sales and trading, asset and wealth management, public finance, insurance, private capital, and family office services.

About Us

We are a family-owned financial services firm that values client relationships, long-term stability, and supporting the communities where we live and work.

The Stephens Story

The idea of family defines our culture, because each of us knows that our reputation is on the line as if our own name was on the door.

Leadership

Our reputation as a leading independent financial services firm is built on the stability of our longstanding and highly experienced senior executives.

Impact Initiatives

We are committed to corporate philanthropy; economic and financial literacy advocacy; and diversity, equity, and inclusion initiatives.

Our Brand Ambassadors

Stephens is proud to sponsor the PGA TOUR, LPGA Tour, and PGA TOUR Champions careers, as well as applaud the philanthropic endeavors, of our Brand Ambassadors.

Making Connections

We host many highly informative meetings each year with clients, industry decision makers, and thought leaders across the U.S. and in Europe.

Our Businesses

Capital Management

We provide fiduciary investment strategies to public-and private-sector institutional clients through asset allocation, consulting, and retirement services.

Fixed Income Sales & Trading

Decades of proven performance and experience in providing tailored fixed income trading and underwriting services to major municipal and corporate issuers.

Institutional Equities and Research

Proven industry-leading research, global market insights, and client-focused execution.

Insurance

Customized risk management, property & casualty, executive strategies and employee benefits solutions that protect our clients over the long term.

Investment Banking

We assist companies with accessing capital through innovative advisory and execution services that help firms achieve their strategic goals.

Private Capital

We have been a trusted and reliable source of capital for private companies for over 70 years.

Private Wealth Management

Our experienced Private Client Group professionals develop customized investment strategies to help clients achieve their financial goals.

Public Finance

We are a trusted municipal advisor with proven expertise in public financings. We also work with clients in negotiated and competitive municipal underwritings.

Market Trends

EV Battery Market Faces Dual X-Factors: Soaring Nickel Prices and Russia Sanctions

Mar 11, 2022

The rechargeable electric vehicle (EV)battery market is preparing for two great unknowns: the extent of U.S. and European Union sanctions against Russia for its war in Ukraine, and the long-term trajectory of nickel prices that recently hit record highs in response to the conflict.

Russia is among the world’s leading producers of nickel, behind only the Philippines and Indonesia, with China acting as the leading importer. As long as nickel remains an essential component for achieving high-energy density in certain types of lithium-ion(Li-ion) EV batteries, these X-factors may impact both battery manufacturers and vehicle manufacturers.

These companies are likely to seek ways of offsetting potential material cost increases and supply constraints, such as passing costs onto customers or forging partnerships with foreign entities to access required resources. Companies also may pursue capital raising and M&A strategies for securing access to nickel, or investing more in EV batteries not reliant upon nickel.

Between Feb. 23 and March 8, the price of nickel jumped from $24,950per ton to $100,000 on the London Metal Exchange; it has since fallen back under $50,000. The same day nickel reached its high, President JoeBiden announced a U.S. ban on Russian energy imports of oil, natural gas, and coal.

Although the primary driver of demand for nickel is its usage in stainless steel[4] production and rechargeable batteries account for less than a fourth of nickel consumption, within the EV market nickel plays a crucial role. Most Li-ion batteries rely upon nickel, according to the Nickel Institute[5], and the composition of both nickel cobalt aluminum (NCA) and nickel manganese cobalt (NMC) battery cathodes is approximately 80% nickel.

Last year, 54% of global EV battery capacity deployed on roads used in new plug-in electric vehicles contained such high-nickel cathode chemistry, according to Adamas Intelligence[6].

In 2021, high-nickel chemistry EV batteries prevailed throughout the U.S. and Europe. Across Asia-Pacific, there was nearly equal usage of high-nickel, low-nickel, and no-nickel chemistries, according to Adamas.

Lithium ion battery cell prices fell steeply between 2014 and 2021, but availability concerns and raw material prices had led to forecasts, even before[7] Russia invaded Ukraine, that battery cell prices would rise this year. The current nickel market disruptions could accelerate interest in adoption of no-nickel EV batteries, such as those with lithium iron phosphate (LFP) cathodes, which can be less expensive to produce than nickel-based batteries.

As of 2021, China manufactured 95%[8] of the world’s LFP-based batteries. However, last year, major U.S. and European automakers announced plans to ramp up[9] usage of LFP-based batteries, and President Biden has urged U.S. carmakers to relocate more of their battery supply chain[10] back to domestic factories.

Yet the nickel-based EV battery market might avoid long-term headwinds, especially if Indonesia and the Philippines increase nickel production or China agrees to absorb Russia’s nickel exports. Manufacturers seeking to assess how these factors could impact their capital and M&A strategies may benefit from the perspective of objective experts in renewable energy.

[1] https://pubs.usgs.gov/periodic...

[2]https://www.lme.com/en/metals/...

[3]https://www.cnn.com/2022/03/08...

[4] https://pubs.usgs.gov/periodic...

[5]https://nickelinstitute.org/ab...

[6]https://www.adamasintel.com/ni...

[7]https://www.reuters.com/busine...

[8]https://www.reuters.com/articl...

[9]https://www.environmentalleade...

[10]https://www.nytimes.com/2022/0...

About the Expert

Maximo Blandon

Managing Director, Head of Clean Technology & Infrastructure, Investment Banking

Read full bio
  1. This article was prepared for informative purposes as of its stated date and is not an offer to buy or sell any securities. It does not purport to be a complete description of the securities, markets or developments referred to in the article or to include all information needed to evaluate any transaction. Information contained in the article was derived from sources considered reliable, but has not been independently confirmed or verified and is not guaranteed to be accurate or complete. No subsequent publication or distribution of this material shall mean or imply that any such information or opinion remains current at any time after the stated date of the material. We do not undertake to advise you of any changes in any such information or opinion. Additional information is available upon request. The views and opinions expressed herein are the personal opinions of the author. Any expressions of opinion speak only as of the date of the preparation of the article, do not necessarily reflect the opinions of any other person or entity, and are subject to change without notice. Data referenced in this document is derived from data sources cited herein or other third party data sources or data providers (collectively “Data Providers”). Data Providers do not guarantee the accuracy, adequacy, completeness or availability of any content provided and are not responsible for any errors or omissions, regardless of the cause or for the results obtained from the use of such content. Such information is believed to be accurate on the date of issuance of this document. In no event shall the Data Providers or Stephens be liable for any damages, costs, expenses, legal fees or losses in connection with any use of the data included in this document. “Stephens” (the company brand name) is a leading family-owned independent financial services firm. Stephens’ US operations are headquartered in Little Rock, AR, with strategic locations in the US and a European presence in the UK and Germany. Stephens Inc. is a Member of the New York Stock Exchange and the Securities Investor Protection Corporation and is regulated by the United States Securities and Exchange Commission and the Financial Industry Regulatory Authority. Stephens Europe Limited (Registered office: 12 Arthur Street, London, EC4R 9AB, Registered number 8817024) is authorized and regulated by the Financial Conduct Authority. For more information, visit www.stephens.com. © 2022 Stephens