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by Aaron Brzozowski March 17, 2022, 12:40 pm
Russia’s invasion of Ukraine, and the ensuing global economic sanctions and export bans, are continuing to wreak havoc on commodity prices. You’ve probably felt it firsthand any time you had to stop at the pump within the past few weeks, as crude oil prices shot up in response to the conflict.
But it isn’t just oil; determined to show up gradually rising lithium prices, nickel took off like a rocket at the start of the month, the price chart now strongly resembling a vertical cliff face. Nickel is used in electric vehicle li-ion battery chemistries, making up one of the key materials within the cathode, which could spell trouble for EVs once automakers’ current supplier contracts expire. As a matter of fact, Tesla has already raised prices in response to the spike.
A bigger casualty is Rivian, which said last Thursday that it will likely produce just 25,000 electric vehicles this year – half of its original target – owing to supply chain issues, Reuters reports. To be clear, that may not just be as a result of the nickel price spike; rare earth metals, used to make the permanent magnets in most EV traction motors, have also seen their prices increase in recent months, although that’s not necessarily being driven by the war in Ukraine.
The issue is so bad that China’s Ministry of Industry and Information Technology has had to step in, instructing producers including China Rare Earth Group, China Northern Rare Earth Group, and Shenghe Resources to regulate operations and trading, and put an end to hoarding and speculation. Reuters reports that the price of praseodymium-neodymium alloy, a common material for EV motor magnets, has grown 32% in China this year so far, swelling to around $220,000 US per metric ton.
But just in case you’re under the impression that internal combustion ultimately gets the last laugh, palladium and platinum – two precious metals that are used in catalytic converters – are also soaring. Russia is the world’s second-largest producer of both metals, as Autoblog reports, responsible for more than 10% of the global supply of platinum, and about 40% of the world’s palladium. That helps explain how palladium prices are at an historic high and platinum prices are at near-record-breaking levels.
All this is to say: whatever sticker shock you might have felt looking at new and used car prices over the past few months, things probably aren’t about to get much better anytime soon.
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