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by Aron
3144 days ago
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I agree that cobalt is a fairly small proportion of the total cost of the vehicle. Tesla should be able to weather many multiples in the increase in cobalt price. I'm more worried about the dreadful notion of a complete supply disruption (akin to 70s oil crisis). I don't think this is a common situation and is generally unlikely in most markets but with cobalt there is a confluence of factors that seems to make it more likely: the byproduct of nickel/copper effect, the political factor in DNC, the lead-time to new mines, the potential for alternative chemistries to pop up and obviate cobalt, the generally pessimistic view of EVs outside of the narrow pro-Tesla, California green circle, etc. I basically think it's possible that the EV growth curve (50+% Y/Y kind of stuff) is only believed by Tesla and a relatively few people, and that these people aren't particularly common in mining circles. My general perspective is that Tesla should derisk the miners by putting some money upfront on a contractual basis. Maybe it's Panasonic that does this. I'm happy to see that the rumor is the price spike to 25$\lb was brought on by hedge fund speculators. I think that's a perfect example of how Wall Street greed is actually good. The high price signal helps motivate the entire supply chain. Thanks for your lengthy answer. |
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heh
> My general perspective is that Tesla should derisk the miners by putting some money upfront on a contractual basis. Maybe it's Panasonic that does this.
I think they have a long term supply deal with Sumitomo Metal Mining[1] (Phillipines, not Indonesia, my bad), but I'm not sure if there's money up front.
It's my personal opinion that the industry is well prepared for a drastic increase in cobalt demand. I'll also point out that laptops and cell phones put a very large buffer in place for NCA and NMC chemistries. Laptops and cell phones use LCO which is a 100% cobalt oxide cathode. A high supply pressure will cause them to switch to low-cobalt chemistries like NMC and NCA, or even to completely non-cobalt chemistry. That'll free up cobalt for all batteries. LCO is becoming less popular but AFAIK it's still the majority of batteries by kWh and certainly by use of cobalt.
[1] https://evobsession.com/sumitomo-metal-mining-boosting-nca-u...