In addition to lithium, nickel and cobalt, graphite is one of the key ingredients to make EV batteries
With almost 3 million electric and plug-in hybrid vehicles sold in the first 11 months of 2021, which is a 170% increase over the same period in 2020, the Chinese EV market is growing fast – perhaps too fast for major battery and EV manufacturers in the People’s Republic, which are reportedly worried about about the supply of graphite.
In addition to lithium, nickel and cobalt, graphite is one of the key ingredients to make EV batteries. The material, in both natural and synthetic forms, is used for the anode, which is the negative end of a lithium-ion battery. According to this website, a large EV battery requires about 25 kg of graphite for the anode.
Approximately 70% of all graphite comes from China but with the steady growth in demand for EVs in recent years, there are legitimate concerns that there may not be enough graphite in the market for local manufacturers such as Contemporary Amperex Technology Co Ltd (CATL) to secure.
Consultancy Benchmark Mineral Intelligence (BMI) forecasts a roughly 20,000 tonne graphite deficit in 2022, which is bad news, especially when compared to a similar-sized surplus last year. An industrial source claimed that the amount is enough to make batteries for 250,000 EVs.
Even before the deficit, domestic prices of anode-grade graphite flake have already gone up almost 40% year-to-date at 4,500 yuan (approximately RM2,976) per tonne. With the demand for battery anodes expected to grow by an average of 27% per year over the next decade, a steady increase in prices is a certainty.
The situation is set to worsen starting February next year as local authorities look to cut down production of graphite during the Winter Olympics as part of efforts to reduce pollution and ensure blue skies. This coincides with the fact that graphite mines in Northeast China tend to close during the winter months due to extreme cold temperatures.
To battle the imminent shortage, CATL is reportedly studying using the natural form of graphite in battery anodes as an alternative to artificial graphite because of greater availability. However, natural graphite may not offer the same level of performance compared to the artificial version.
