The use of lithium -- the key ingredient in the advanced battery systems of hybrid and electric cars -- has doubled, and its price has tripled since 2000. Bloomberg
reports that by 2020, the price of lithium will rise two or three times more.
"Demand for lithium batteries has been growing at about 25 percent a year, outpacing the 4 percent to 5 percent overall gain in lithium," Jesse Riseborough of Bloomberg writes.
Performance-wise, the main advantage of batteries made with lithium, a conductive metal that's the lightest in the periodic table, is that they generate more electricity.
From a cost perspective, lithium is seen as a less-expensive alternative to the nickel-metal hydride battery packs that most hybrids have utilized since 1997, when the Toyota Prius
became the first mass-produced hybrid vehicle. Carmakers have increasingly turned to lithium in recent years: Both the new plug-in Toyota Prius and the 2012 Honda Civic Hybrid
rely on lithium batteries. And electric vehicles like the Chevy Volt
and the Nissan Leaf
also use lithium.
As battery makers strive to make less expensive batteries, they're relying more and more on lithium. "Expanding battery sales to automakers is seen as the 'golden goose' for the lithium industry," Riseborough writes. But if the price of lithium does in fact double or triple by 2020, does it mean that the future cost of hybrids and electric vehicles won't be any less (relatively speaking) than their early-adopter premium price tags today reflect?
The key will be for supply to keep pace with demand. Australia and Chile are the two biggest producers of lithium, and mining companies in both countries are now ramping up their lithium-protraction operations. Rio Tinto, the world's third-largest lithium producer, has its eye on a mine in Serbia, which it says is capable of producing 20 percent of the global output of the metal.
“You can’t see any reason why [lithium] won’t be a high growth market for many, many years," Neil Gregson of JPMorgan Asset Management said in an interview in London. "It’s a very interesting area.”