ARK Analyst Sees 'Bad Time' For Inefficient EV Makers That Use Lithium-Ion Batteries: Here's Why

Tesla Inc TSLA bull Ark Invest has predicted that electric vehicle makers without enough mechanical efficiency are going to have a “bad time” producing cars with desirable ranges powered by lithium iron phosphate batteries (LFP). 

What Happened: Ark research analyst Sam Korus’s prediction trails the soaring price surge for nickel since Russia’s invasion of Ukraine two weeks ago and the increasing shift towards LFP.

“Years ago the forecast was that ~75% of the EV battery market would be nickel-based. Now nickel prices are high, for the time being, and the market seems to be shifting toward lithium iron phosphate,” Korus said in a Twitter post.

1/Remember 3 years ago when rising cobalt prices were going to stop battery cost declines?

Since then battery prices are down over 20% on $/kWh basis and batteries are being developed with far less cobalt. pic.twitter.com/T6nHnPQOan

— Sam Korus (@skorusARK) March 8, 2022

LFP batteries have less energy density and need more efficient drivetrains, but they are less expensive than those with more nickel-rich composition.

See Also: Why Tesla, Rivals Could Find It Tough To Launch Affordable EVs If Russia-Ukraine War Keeps Raging

Tesla Leads The Way: Elon Musk-led Tesla had last year said that despite the hit, its standard range vehicles would shift to an LFP battery chemistry, a move seen as an effort to lower EV costs. Rivals Ford Motor Co F and General Motors Co GM are expected to make that switch as well.

"Superior efficiency suggests that, unlike its competition, Tesla will offer an acceptable range at lower prices with LFP batteries,” Korus said last year.

The popular stock-picking firm run by Cathie Wood expects Tesla shares to hit the $3,000 mark by the end of 2025. 

See Also: Lithium Prices Point To Rising EV Prices In 2022

Prices of nickel and other key electric-vehicle materials have skyrocketed as the Russia-Ukraine war has sparked supply worries. Nickel trading was suspended on Tuesday after prices more than doubled to breach the $100,000 per metric ton at the London Metal Exchange.

Most automakers have in recent years boosted the amount of nickel that goes in the lithium-ion batteries, using at least 60% of the metal. 

Price Action: Tesla stock closed 2.5% higher at $824.4 a share on Tuesday.

Photo Courtesy: Tesla