German Auto Industry Alarmed Over Lack of Raw Materials

Nickel Became Dramatically More Expensive
There are even more extreme price developments for the heavy metal nickel, which is required for alloys and the production of lithium-ion batteries.

From $20,000 to $25,000 per ton, it shot up to more than $100,000 after Russia’s invasion of Ukraine. Although the price of nickel has since fallen again, commodities analysts expect it to be around $34,000 by mid-year.

On a global scale, the Russian Federation is the third-largest producer of nickel ore,” Michael Szurlies from the Federal Institute for Geosciences and Natural Resources (BGR) told DW. “Possible delivery failures from Russia only affect the refined nickel product. Short-term delivery failures are generally difficult to compensate.”

Higher Car Prices, More CO2
Nickel shortages from Russia would push up electric vehicle (EV) prices, slowing Western economies’ progress in reducing carbon emissions, warns the London-based consultancy GlobalData.

The reasoning makes sense: The slower electromobility takes to get going, the longer we will be dependent on Russian oil and gas.

Now is a critical time for EV adoption as industrialized nations seek to accelerate the process of decarbonization,” said GlobalData analyst Daniel Clarke.

China Benefits from Crisis
Electric car and battery manufacturers in China, on the other hand, could benefit from the sanctions against Russia by offering to buy raw materials from Russia at lower prices.

China already has a strong position in the battery metals supply chain and would further strengthen its global competitive position if it could buy Russian nickel cheaply because of the sanctions,” Clarke said.

GlobalData analyst Lil Read added that the only option left for Western manufacturers is to expand business relationships with other nickel-producing countries such as Indonesia or the Philippines.

However, this would give rise to further problems. Because of the greater geographical distance between the two production countries, emissions during transport would increase, and if the raw materials were extracted more intensively there, environmental issues would increase.

In addition, Europe’s dependency on China would increase as Chinese companies played a key role in the main nickel mines in both countries.

New Technologies, Partnerships Urgently Needed
Against this background, Read believes that new battery technologies could prevail in the long term.

The pace of battery innovation has been breathtaking over the past few decades, but innovation does not happen overnight. We expect that lithium-ion phosphate (LFP) batteries, which contain neither nickel nor cobalt, will gain popularity and acceptance in the medium term if the conflict continues.”

According to the car industry association VDA, the Ukraine crisis clearly highlights how Germany and the EU must reduce their dependency. VDA, therefore, demands that they build up and expand domestic raw material extraction, ensure fair access to raw materials from abroad and promote the development and expansion of the circular economy, which involves more recycling of products and raw materials.

In addition, energy and raw material partnerships are needed as the markets are currently being distributed worldwide to a large extent without Germany,” VDA said.

Klaus Ulrich is a DW reporter. This articleis published courtesy of Deutsche Welle (DW).