New US battery facilities could curb the demand impact of Tesla's plans to remove cobalt from its batteries over the next three years.
Tesla said this week that it will stop using cobalt in its new 4680 lithium-ion batteries, substituting manganese and nickel-based cathodes. But growing demand and new electric vehicle (EV) plants built by other manufacturers could cushion this drop in demand.
The California-based manufacturer expects to have 100GWh of battery production capacity by 2022, all based on cobalt-free chemistries.
Its Cybertruck and future semi-trucks will use a pure nickel cathode battery, while its mid-range cars will feature nickel-manganese cathodes, described as "two thirds nickel and one third manganese".
Tesla accounted for 58pc of US EV sales, or 189,355 vehicles, last year, according to the Department of Energy. The company produces battery cells domestically at its Nevada Gigafactory, raising concerns that the shift away from cobalt could weigh heavily on US demand for the metal and its associated upstream chemicals.
But the transition away from cobalt will not be immediate. Roll-out of the 4680 battery type is at least three years away, the company said, leaving no alternatives in the interim. And as EV production ramps up, Tesla plans to increase purchases of current battery types — some of which bear cobalt — from suppliers such as Panasonic, LG and CATL.
By the end of 2020, the company will have expanded its Model Y capacity at the Fremont, California, facility to 500,000 vehicles a year from 400,000, while the new Gigafactory in Austin, Texas, will add additional Cybertruck and Model Y capacity within 18 months.
Other auto manufacturers are adding US cobalt-bearing battery production capacity. LG Chem and GM are building a 30GWh joint-venture plant in Ohio that will produce a nickel-manganese-cobalt-aluminum battery. SK Innovations is building two battery plants in Georgia — one with a 9.8GWh capacity that will start production in 2022, and a 11.7GWh facility due to launch in 2023. The two plants will be able to supply batteries for 300,000 EVs a year.
Tesla is expected to face growing competition in the EV sphere, broadening the options for vehicles with cobalt-bearing batteries. GM plans to launch 22 models by 2023, and Ford has earmarked a portion of $700mn of investment in its Dearborn, Michigan, plant to support hybrid and EV production of the popular F-150 truck.
Volkswagen, meanwhile, plans to begin building its new all-electric SUV at its Chattanooga, Tennessee, plant in 2022.
Tesla itself is expected to boost its own battery production capacity. The Gigafactory in Nevada has at least 20GWh of capacity, with the company starting test production of the 4680 battery at a 10GWh California plant. Company-wide capacity will exceed 3TWh by 2030, Tesla said.
Argus assessed US cobalt prices at $15.40-16.00/lb on 22 September, up from a 2020 low of $13.28-14.10/lb on 14 July. US cobalt demand is still heavily dependent on demand for superalloys, the prices of which have come under pressure following this year's sharp drop in air travel.
