WEBVTT - Scramble for Battery Metals Puts Chemistries in Focus 0:00:00.120 --> 0:00:02.800 Hi, this is Dana Perkins and you're listening to Switch 0:00:02.920 --> 0:00:05.920 on the B n A of podcast. Today we talk 0:00:06.000 --> 0:00:09.600 about battery metals, which are experiencing record high prices due 0:00:09.640 --> 0:00:13.399 to supply chain pressures, inflation, and demand growth. And it's 0:00:13.400 --> 0:00:16.280 no wonder since the sales of electric vehicles and stationary 0:00:16.320 --> 0:00:19.919 storage have grown, which in turn require batteries and then 0:00:20.000 --> 0:00:23.159 in turn require the metals that they're made of. But 0:00:23.239 --> 0:00:26.080 with most things, it's not quite that simple, and that's 0:00:26.120 --> 0:00:29.040 why we decided to bring our lead metals and mining 0:00:29.080 --> 0:00:32.320 analysts onto the show today. So let's take a quick 0:00:32.320 --> 0:00:35.400 step back and if we look at benfs annual Long 0:00:35.520 --> 0:00:38.760 Term Electric Vehicle Outlook, they look at the future of 0:00:38.760 --> 0:00:42.160 what demand for electric vehicles could look like. The transition 0:00:42.240 --> 0:00:45.040 is underway and road transport oil demand could peak as 0:00:45.040 --> 0:00:50.879 soon as the electric vehicle market opportunity between two and 0:00:52.200 --> 0:00:55.160 well it could be fifty three trillion dollars according to 0:00:55.240 --> 0:00:59.600 BENFS Economic transition scenario. So in short, this demand sees 0:00:59.640 --> 0:01:02.480 no lindes of abating in the future. But in order 0:01:02.520 --> 0:01:04.760 for any of this to happen again, we're going to 0:01:04.840 --> 0:01:08.959 need more batteries and therefore more battery metals, So what's 0:01:09.000 --> 0:01:12.039 important for a metals analysts to consider when thinking about 0:01:12.120 --> 0:01:15.040 the future of supply and demand in this space. In 0:01:15.160 --> 0:01:18.240 order to discuss this complexity with us and many of 0:01:18.280 --> 0:01:21.479 the factors just swimming around in his head, Quoisium Popo 0:01:21.600 --> 0:01:23.880 joins us today and he is the lead analyst on 0:01:23.920 --> 0:01:27.000 metals and mining for BENOF. To research more about these 0:01:27.040 --> 0:01:31.120 topics and to access the underlying data be enough subscribers 0:01:31.160 --> 0:01:33.920 can go to the Bloomberg terminal or b enof dot 0:01:33.920 --> 0:01:37.480 com or BNF smobil app and I recommend reading the 0:01:37.480 --> 0:01:43.280 piece titled one Battery Metals Outlook Supply Turbulence Ahead. As 0:01:43.280 --> 0:01:45.720 a reminder, B and e F does not provide investment 0:01:45.800 --> 0:01:48.360 or strategy advice, and you can hear our full disclaimer 0:01:48.400 --> 0:01:50.680 at the very end of the show. And also if 0:01:50.720 --> 0:01:52.360 you want to hear more of our shows on the 0:01:52.400 --> 0:01:55.760 future of energy, transport and sustainability and be alerted to 0:01:55.760 --> 0:01:58.400 when they come out, make sure to click subscribe on 0:01:58.480 --> 0:02:02.240 whatever podcast player you're listening to us on today. And 0:02:02.320 --> 0:02:10.919 now let's speak with Quzily about battery Metals Crazy. Thank 0:02:10.919 --> 0:02:13.799 you very much for coming back to the show. Thank 0:02:13.840 --> 0:02:16.280 you you know so the last time we were here, 0:02:16.720 --> 0:02:20.000 you and I discussed cobalt specifically, but today we're actually 0:02:20.000 --> 0:02:22.239 going to take it back and we're going to talk 0:02:22.280 --> 0:02:25.280 about kind of all battery metals because you recently did 0:02:25.320 --> 0:02:29.359 a market outlook for this group of metals. So as 0:02:29.400 --> 0:02:33.000 we get started, can you outline what are the battery metals? Yeah, 0:02:33.000 --> 0:02:35.360 so it really depends on who you ask, right, which 0:02:35.400 --> 0:02:39.160 batching technology that you're looking at For us specifically Bloom 0:02:39.160 --> 0:02:41.880 again the f When we talk about boutchy metals, we're 0:02:41.880 --> 0:02:44.520 trying to concentrain it within the contest of my technology 0:02:44.520 --> 0:02:47.280 called lethio, my own batteries. So little iron batteries have 0:02:47.360 --> 0:02:51.440 become the dominant battery technology in the space. That means 0:02:51.440 --> 0:02:53.840 a lot to us, which is i e. The electric 0:02:53.880 --> 0:02:57.079 vehicle industry and also the stationary storage. So what is 0:02:57.120 --> 0:02:59.919 a little iron batteries? So it's a battery wa I said, 0:03:00.040 --> 0:03:02.440 name sounds there's a lithium in there. So if you 0:03:02.480 --> 0:03:07.480 forget any battery metal, Danta, don't forget that lithium. Yeah, 0:03:07.520 --> 0:03:10.480 it's in the name exactly what is in the name? Yes, 0:03:10.560 --> 0:03:13.359 so that is number one, number two. It also depends 0:03:13.360 --> 0:03:15.919 on which battery chemistry beyond just having a lithium in there. 0:03:15.919 --> 0:03:18.840 It depends on which battery chemistry. Are quite a number 0:03:18.880 --> 0:03:21.520 of them, but what we've come to realize is that 0:03:21.560 --> 0:03:24.560 there are a few metals that are consistent with the 0:03:24.680 --> 0:03:28.919 dominant chemistry that is in our electric vehicles today as 0:03:28.919 --> 0:03:31.679 well as in our stationary storage. So I would name 0:03:32.280 --> 0:03:34.920 just those ones that we believe are quite dominant and 0:03:34.960 --> 0:03:37.320 also from a supply chain perspective, have a lot of 0:03:37.360 --> 0:03:42.600 importance because they would make the ev adoption dream happen ultimately. 0:03:43.280 --> 0:03:45.720 So number one I've mentioned lithium. I also want to 0:03:45.720 --> 0:03:49.360 add another one called nickel. So nickel you will find 0:03:49.400 --> 0:03:52.360 it in the min Southeast Asia, in Indonesia, you can 0:03:52.360 --> 0:03:55.520 also find it in countries like Australia. And then third 0:03:55.560 --> 0:03:59.280 to that, you have cobotes. And you reminded our listeners 0:03:59.320 --> 0:04:02.040 of our inter action the last couple of months ago 0:04:02.160 --> 0:04:04.080 where I just returned from the d r C as 0:04:04.080 --> 0:04:07.840 part of my work to identify what is actually happening 0:04:08.000 --> 0:04:10.120 in the cobalt industry. So that is the third one. 0:04:10.600 --> 0:04:14.640 The fourth one we have manganese. So manganese is predominantly 0:04:14.680 --> 0:04:17.720 extracted in South Africa, so they are the market leaders 0:04:17.760 --> 0:04:20.919 in the extraction of manganese, so that is also used 0:04:21.200 --> 0:04:25.280 as a battery metal. And I think in terms of cathode. 0:04:25.640 --> 0:04:28.040 Cathode is that if you ever had a look at 0:04:28.040 --> 0:04:31.000 a battery, there is a plast and a minor sign. 0:04:31.560 --> 0:04:34.280 So the plas sign represents what we call the cathode. 0:04:34.600 --> 0:04:37.400 So these four metals are the ones that are bloomed. Again, yes, 0:04:37.520 --> 0:04:40.720 we cover and classify them as the cathode. There is 0:04:40.760 --> 0:04:43.000 also a minor sign in another for there to be 0:04:43.080 --> 0:04:45.320 that extrage of energy. I own was moving from one 0:04:45.320 --> 0:04:48.719 point to data. So the minor sign on your battery 0:04:49.279 --> 0:04:52.600 is what it encompasses of a metal called graphic to 0:04:52.680 --> 0:04:55.080 a material called graphic. So all in all data I've 0:04:55.120 --> 0:04:59.400 mentioned five materials or metals. We've got lithium, we've got 0:04:59.400 --> 0:05:02.920 a nickel, we've got cobalts, we've got manganese, and then 0:05:02.960 --> 0:05:05.800 graph FLI. So for the battery metals that we're covering, 0:05:06.000 --> 0:05:08.080 or actually for battery metals generally, which are the raw 0:05:08.120 --> 0:05:11.360 materials that go into making these vehicle batteries that they 0:05:11.360 --> 0:05:14.600 were talking about as we're looking at electrifying transport, and 0:05:14.600 --> 0:05:17.760 that was covered actually in a previous episode where we 0:05:17.800 --> 0:05:20.000 talked a bit about the electric vehicle outlook that we 0:05:20.040 --> 0:05:22.560 put out every year. Do we have a sense for 0:05:23.080 --> 0:05:26.640 how much the cost of the raw materials the metals 0:05:27.120 --> 0:05:31.280 actually are in terms of the overall cost of the battery. Absolutely, 0:05:31.360 --> 0:05:34.520 So this is also a very interesting area. So depending 0:05:34.520 --> 0:05:37.760 on which chemistry use, you realize that a huge component 0:05:37.800 --> 0:05:40.360 of your battery it's coming out of the metals. But 0:05:40.440 --> 0:05:42.040 I think the key take home is the fact that 0:05:42.640 --> 0:05:46.280 most expensive component if you slide o peanut buttery, is 0:05:46.320 --> 0:05:48.640 a metals in there. And by this I'm not saying 0:05:48.640 --> 0:05:51.880 that please go slide open and electricy vehicle battery. Just 0:05:51.880 --> 0:05:54.400 take the motel cells. It's not safe. Don't do that. 0:05:54.680 --> 0:05:58.360 Although when you're done with it, circular economy recycling, that's 0:05:58.360 --> 0:06:01.159 a whole another show. We can have those battery metals 0:06:01.200 --> 0:06:04.320 like professionally extracted and reused. But anyway, I digress. We'll 0:06:04.320 --> 0:06:06.760 do that another day. So you're saying once you're in 0:06:06.800 --> 0:06:08.840 the battery, so once you in battery. So there are 0:06:08.880 --> 0:06:12.360 some chemistries where the battery, the total battery costs from 0:06:12.400 --> 0:06:16.800 materials will be able six of the total costs, so 0:06:17.040 --> 0:06:20.640 much cereals the total cost of the battery. And there 0:06:20.680 --> 0:06:22.720 are some chemistry day now that it could go as 0:06:22.800 --> 0:06:26.960 high as it really depends on the battery chemistry, but 0:06:27.000 --> 0:06:29.960 those are the ranges that acquis and our modeling is 0:06:29.960 --> 0:06:32.880 telling us that it could get through. Do you think 0:06:32.920 --> 0:06:36.680 that when individuals who are doing development on the battery 0:06:36.720 --> 0:06:40.520 chemistryes I know they're looking at batteries that will last longer, 0:06:40.560 --> 0:06:44.240 have longer range in theory for these vehicles when they're 0:06:44.279 --> 0:06:46.400 making them, do you think that they're also trying to 0:06:46.760 --> 0:06:51.240 remove dependence on specific metals and reduce the need for 0:06:51.279 --> 0:06:54.680 specific metals for various reasons, whether it be human rights 0:06:54.760 --> 0:06:58.279 issues around the extraction of that particular metal or around 0:06:58.320 --> 0:07:00.800 the costs, which is what we're really and delve into 0:07:00.880 --> 0:07:03.600 today because the supply and demand side of things, as 0:07:03.640 --> 0:07:07.400 we're looking at inflationary environment and supply chain disruption certainly 0:07:07.440 --> 0:07:09.720 is hitting this industry as it is so many. Do 0:07:09.760 --> 0:07:12.160 you think that that is a place where people are 0:07:12.160 --> 0:07:15.320 specifically trying to change the chemistry is to adjust to 0:07:15.480 --> 0:07:19.239 or is it really much more around battery performance battery life. 0:07:19.640 --> 0:07:22.560 So we actually looked at this question and analysis and 0:07:22.600 --> 0:07:25.360 we singled out cobalt. Right. We mentioned that a couple 0:07:25.400 --> 0:07:27.640 of months ago I came here, we talked about my 0:07:27.720 --> 0:07:30.680 experience in the DRC and the fact that there's still 0:07:30.720 --> 0:07:34.320 consense around ethical supply chain. At that time as well, 0:07:35.160 --> 0:07:37.960 the cobalt prices were at record high. To just stand 0:07:37.960 --> 0:07:40.720 that one of the major mining companies which extract cobalt 0:07:41.000 --> 0:07:43.720 had to shut down the MIND because the prices were 0:07:43.760 --> 0:07:47.679 not favorable for them. So what happened between that time, 0:07:47.760 --> 0:07:51.680 which is somewhere around twenty nine and now, is the 0:07:51.720 --> 0:07:55.680 fact that automakers reacted to first of all, the high 0:07:55.680 --> 0:07:59.600 price and then the ethical challenges associated with the supply 0:07:59.640 --> 0:08:02.200 chain what they do. So remember how I just talked 0:08:02.200 --> 0:08:04.800 about the fact that they are different battery chemistries. In 0:08:04.800 --> 0:08:08.200 other ways, there are different metals which form the catholic 0:08:08.280 --> 0:08:12.800 materials or the battery itself. So automakers realize that if 0:08:12.840 --> 0:08:17.640 they can divect to other chemistries like the lethio myron 0:08:17.880 --> 0:08:23.480 phosphate battery technology which uses lethion, iron and phosphate that's 0:08:23.480 --> 0:08:26.760 its name sounds, and they DIVECT from the high nickel 0:08:26.880 --> 0:08:30.440 chemistry which uses nickel, cobalt and manganese. If they could 0:08:30.440 --> 0:08:33.480 do this diversion, it would have saved themselves quite a 0:08:33.480 --> 0:08:36.400 lot of money simply because iron in phosphate are low 0:08:36.480 --> 0:08:40.040 cost metals. But then most importantly, they would have weaned 0:08:40.080 --> 0:08:44.280 themselves of cobalt because there's battery technology that's not require 0:08:44.280 --> 0:08:48.960 you to use cobalt. So that is absolutely happening. And 0:08:49.000 --> 0:08:51.680 when we run the numbers, what we've realized is that 0:08:51.720 --> 0:08:55.280 in twenty what bloom begin he thought would be the 0:08:55.360 --> 0:09:00.720 total demand for cobalt from batteries by have been reduced 0:09:00.720 --> 0:09:04.720 by half, simple because which is quite big cause I 0:09:04.720 --> 0:09:07.080 think for me it ended up being my favorite chart 0:09:07.160 --> 0:09:11.080 and also my most revealing experience during the production of 0:09:11.120 --> 0:09:14.000 this report. So you do realize that initially I was thinking, oh, 0:09:14.000 --> 0:09:16.079 maybe did we get it wround at the beginning, And 0:09:16.240 --> 0:09:18.760 actually it's industry that was switching. So let me do 0:09:18.800 --> 0:09:21.720 a little bit of name calling companies that are actually 0:09:21.720 --> 0:09:25.479 switched into this. I own little my own phosphate technology. 0:09:25.720 --> 0:09:28.079 Of course, the obvious one, Tesla, which was a big 0:09:28.120 --> 0:09:30.800 surprise to me because if four years ago you had 0:09:30.840 --> 0:09:34.559 told me that Tesla is going to use a battery 0:09:34.559 --> 0:09:38.440 technology that is currently dominant in China, that Chinese company 0:09:38.520 --> 0:09:41.559 c t L is the biggest manufacturer of LFP, If 0:09:41.559 --> 0:09:45.240 you have told me that Tesla and American company will 0:09:45.280 --> 0:09:49.120 switch to a China dominant battery chemistry four years ago. 0:09:49.440 --> 0:09:53.240 I probably have laughed. Right, that was the reality when 0:09:53.240 --> 0:09:57.240 elon mask Dancer stage and opened the Shan High factory. 0:09:57.440 --> 0:09:59.880 Months later, they announced that their entry model or this 0:10:00.000 --> 0:10:03.320 standard model, Model three, is going to use the LSP 0:10:03.440 --> 0:10:07.040 battery technology in China and there are discussions of even 0:10:07.080 --> 0:10:10.240 extending it to Europe. Just this morning, I woke up 0:10:10.600 --> 0:10:12.839 and then I had the fod 's also announced that 0:10:12.920 --> 0:10:16.440 its entry level electric vehicle is also going to use 0:10:16.480 --> 0:10:19.200 the LFP. Mes Cities has done that already, BM doub 0:10:19.360 --> 0:10:22.559 has done that. So you're absolutely correct when you mentioned 0:10:22.679 --> 0:10:26.760 that the demand side or electric vehica manufacturers are very 0:10:26.840 --> 0:10:30.520 open to change and they will switch or react to 0:10:30.720 --> 0:10:33.400 conditions within the supply G and B it's prices or 0:10:33.440 --> 0:10:41.280 ethical concerns. Now for a very short break, stay with us. So, 0:10:41.520 --> 0:10:43.800 which are the battery metals that you would say are 0:10:43.840 --> 0:10:46.160 the ones to watch right now and which ones are 0:10:46.240 --> 0:10:49.959 having kind of the greatest constraints on pricing. It feels 0:10:50.000 --> 0:10:52.400 like looking at your children and then trying to decide 0:10:52.400 --> 0:10:56.040 which which of the metals. Yeah, I had a chat 0:10:56.120 --> 0:10:59.480 with our transport team led by Collins, my colleague Collins, 0:11:00.000 --> 0:11:02.839 about which of these is important, which of these should 0:11:02.880 --> 0:11:06.520 we highlight as the most at risk? And it turns 0:11:06.520 --> 0:11:10.240 out all of them, Dana, when we did the numbers specifically, 0:11:10.320 --> 0:11:12.360 so to be able to put that in contest, let's 0:11:12.400 --> 0:11:15.200 just shorten the time frame. So when we looked at 0:11:15.360 --> 0:11:19.240 this year, which of them from a supply needs in 0:11:19.320 --> 0:11:23.360 demand perspective is the one at most risk? All of them? 0:11:23.679 --> 0:11:25.439 And it comes down to a couple of factors that 0:11:25.520 --> 0:11:28.160 we've been experienced. And I know you talked about inflation earlier, 0:11:28.679 --> 0:11:31.880 but beyond just inflation, which are probably addressed down the line, 0:11:32.360 --> 0:11:35.120 Beyond just inflation, you would realize that over the last 0:11:35.240 --> 0:11:38.480 three years the world has gone through and not so 0:11:38.720 --> 0:11:41.800 good experience. Particularly we covered right, We've lost some life 0:11:42.000 --> 0:11:44.920 sadly that people who have not been able to recover 0:11:45.240 --> 0:11:48.439 and they're experiencing long symptoms. It's not really been a 0:11:48.600 --> 0:11:51.920 very good experience. Beyond just this experience as well, the 0:11:52.000 --> 0:11:55.240 supply chain has taken a hit, and part of that 0:11:55.400 --> 0:11:58.040 hits is the fact that companies that were supposed to 0:11:58.160 --> 0:12:02.319 bring on production to me growing demand had to readjust 0:12:02.400 --> 0:12:05.560 their capital location right if you're printing and on certain 0:12:05.640 --> 0:12:07.959 market where you don't know what tomorrow is gonna look like, 0:12:08.400 --> 0:12:10.320 you want to retain as much cash as you can 0:12:10.400 --> 0:12:12.160 on your balance sheet. So what that means is that 0:12:12.600 --> 0:12:15.760 if you're supposed to invest in expanding in Indonesia, or 0:12:15.800 --> 0:12:19.320 building a new plant in South Africa, or even diversifying 0:12:19.400 --> 0:12:21.880 into a new market in the United States of America, 0:12:22.240 --> 0:12:26.360 you think about that twice simply because there's so much uncertainty. 0:12:26.440 --> 0:12:28.679 And that is what happening at the supply side. That's 0:12:28.679 --> 0:12:31.880 what happened there where companies failed to invest in their 0:12:31.920 --> 0:12:36.360 expansion programs but demanded and stop. China did not stop 0:12:36.440 --> 0:12:40.520 buying electric vehicles. Europe did not stop buying electric vehicles. 0:12:40.600 --> 0:12:43.520 They kept growing. So we are in this year where 0:12:43.679 --> 0:12:47.240 hold on, we've realized that actually there's some enough supply. 0:12:47.960 --> 0:12:50.679 Litm is faced on that challenge and prices have risen 0:12:50.760 --> 0:12:54.920 between seven six hundred to seven percent over the last 0:12:54.960 --> 0:12:56.760 eighteen months. In day now, if you're in a business 0:12:56.840 --> 0:13:00.040 where the price of your input commodity has risen to 0:13:00.160 --> 0:13:02.360 that level in eighteen months, you matter as well. That's 0:13:02.400 --> 0:13:05.240 packed right, because everything changes and these are costs you 0:13:05.280 --> 0:13:07.920 cannot easily pass on too. You can assumer if you 0:13:08.000 --> 0:13:10.240 look at cobalts as well, there are things happening in 0:13:10.280 --> 0:13:13.160 the d r C that is beginning to threaten some 0:13:13.400 --> 0:13:17.600 percentage of supply which will make supply inadequate to meet demand. 0:13:17.920 --> 0:13:21.160 If you look at manganese so fit as well, lack 0:13:21.240 --> 0:13:24.160 of investment in China and elsewhere in the world is 0:13:24.280 --> 0:13:26.959 leading to a scenario where the world would have to 0:13:27.120 --> 0:13:30.400 think twice whether there is enough to meet demand. Also, 0:13:30.440 --> 0:13:33.240 if you extended to graph it it's a little bit balanced. 0:13:33.280 --> 0:13:35.679 So I would say that I wouldn't be worried about 0:13:35.720 --> 0:13:38.679 graphite this year so much. But then just in one 0:13:38.760 --> 0:13:41.360 is nickel, and we are actually quite both in the 0:13:41.480 --> 0:13:44.920 nickel space and called a deficit that we might actually 0:13:45.000 --> 0:13:49.760 be heading into a deficit of thtor tons. That's not much, right, 0:13:50.120 --> 0:13:53.480 but these are the things that drive prices and also 0:13:53.640 --> 0:13:56.480 slow down their adoption to electric vehicles, because if auto 0:13:56.559 --> 0:14:00.240 companies cannot lay hands on these metals that are who 0:14:00.320 --> 0:14:03.640 shell to the productional electories, they get till manufacturing they 0:14:03.679 --> 0:14:06.920 are not able to produce, and then it's just extense 0:14:07.080 --> 0:14:10.400 the delivery of electric vehicles and it begins to eat 0:14:10.559 --> 0:14:15.040 into our ability or electric vehicle ability to penetrate markets. Yeah, 0:14:15.120 --> 0:14:17.960 because this isn't just a discussion around prices and whether 0:14:18.040 --> 0:14:19.960 or not prices are high and those will get passed 0:14:19.960 --> 0:14:23.480 on to the consumer. It's about delivery of these things altogether. 0:14:23.640 --> 0:14:26.960 Will we be able to make enough to electrify in 0:14:27.080 --> 0:14:30.880 the timelines that have been so clearly outlined for us 0:14:31.280 --> 0:14:34.680 in terms of the carbon budget for example, this being 0:14:34.880 --> 0:14:37.640 you know, one of the key ways of decarbonizing transport. 0:14:38.120 --> 0:14:41.200 So let's talk a little bit actually just about where 0:14:41.560 --> 0:14:44.600 this might break down and whether or not we are 0:14:44.680 --> 0:14:47.120 already seeing or we think we may see in the 0:14:47.160 --> 0:14:50.400 next couple of years, real slow down in terms of 0:14:51.400 --> 0:14:54.760 you know, production and delivery of vehicles. Are there specific 0:14:54.880 --> 0:14:57.360 choke points that that you're watching super closely at the 0:14:57.440 --> 0:14:59.400 moment where your things are just not getting to where 0:14:59.520 --> 0:15:02.080 they need to be physically, given that this is a 0:15:02.120 --> 0:15:04.880 truly global supply chain, So we tried to use a 0:15:04.960 --> 0:15:08.280 qualitative way of you know, testing the pose of how 0:15:08.440 --> 0:15:11.840 this is translated into their consumer and then obviously being 0:15:11.880 --> 0:15:13.920 being there if we're also very data heavy, so we 0:15:14.000 --> 0:15:16.560 tried to use a quant way of defining this. So 0:15:17.000 --> 0:15:18.960 then if you have a friend that has ordered a 0:15:19.240 --> 0:15:22.920 Tesla folks World an electric version or a BM doub 0:15:23.040 --> 0:15:26.480 electric vehicle, just ask them how the weight in time 0:15:26.560 --> 0:15:29.160 game has been going the last few weeks or the 0:15:29.280 --> 0:15:31.560 last few months, and I think not many people are 0:15:31.600 --> 0:15:34.320 having good experiences because the weight in time keeps getting 0:15:34.400 --> 0:15:38.000 longer and longer. And as test that reported in this 0:15:38.240 --> 0:15:43.040 recent update company update, what material shortages or the supply 0:15:43.200 --> 0:15:47.200 chain shortage is actually becoming a material concern for them 0:15:47.240 --> 0:15:50.400 because it's beginning to impact the ability to produce. So 0:15:50.760 --> 0:15:54.120 that is a qualitative way where we realize that these 0:15:54.200 --> 0:15:57.480 supply chain issues are beginning to translate an impact in 0:15:57.520 --> 0:16:00.280 the end consumer. The second way we look at it 0:16:00.480 --> 0:16:04.160 is we do think that the tipping point for electric 0:16:04.280 --> 0:16:08.720 vehicle adoption is actually going to count from costs. Then 0:16:08.760 --> 0:16:11.320 if you worked in the showroom and you could get 0:16:12.000 --> 0:16:15.720 the price of an internal combustion let me name call again, Corolla, 0:16:16.120 --> 0:16:19.160 the same price as you get an electric vehicle Tesla 0:16:19.240 --> 0:16:22.720 Mod three. Well, the option which would you choose? Probably 0:16:22.800 --> 0:16:25.400 the Corolla it's less expensive, right, But then if they 0:16:25.440 --> 0:16:27.680 were the same price as a Tesla, it's the same 0:16:27.720 --> 0:16:32.440 price maybe the Tesla. Yeah, the Tesla they see, and 0:16:32.840 --> 0:16:35.120 that is where we believe that it will be the 0:16:35.200 --> 0:16:38.400 tennant point for mass adoption of electric vehicle when you 0:16:38.480 --> 0:16:41.760 walk into the showroom and you don't have concent about 0:16:42.120 --> 0:16:44.240 I need to pay extra money to be able to 0:16:44.280 --> 0:16:46.360 afford an electric vehicle. But then it's just a matter 0:16:46.400 --> 0:16:49.560 of which one appeals to be more So, I think 0:16:49.600 --> 0:16:52.160 the tipping point will be that price, what we call 0:16:52.280 --> 0:16:55.720 price priority, and our storage team has crunched the numbers 0:16:56.400 --> 0:17:00.440 that what battery price would we attain price parity, and 0:17:00.560 --> 0:17:03.680 we came down to hundred dollar, taking on what our 0:17:03.960 --> 0:17:07.680 right that is the holy grown number that we do 0:17:07.840 --> 0:17:10.600 believe that all we that the industry is working towards. 0:17:11.119 --> 0:17:15.000 At what point that's the average price of batteries reach undred? 0:17:16.400 --> 0:17:18.639 Unfortunately for us at Blue Bag year for our storage 0:17:18.680 --> 0:17:22.400 team has built authority in this area where every year 0:17:22.440 --> 0:17:25.480 we push out this report and initially, prior to the 0:17:25.600 --> 0:17:29.760 supply chain concerns, our working census, based on our modeling, 0:17:29.800 --> 0:17:33.159 our forward looking model was stating that we could attained 0:17:33.160 --> 0:17:37.840 that price parity between twenty twenty three. Guess what that's 0:17:37.880 --> 0:17:42.000 feeling pretty far away? Yeah, exactly, once we started baking 0:17:42.119 --> 0:17:46.119 in a scenario of these higher commodity prices as a 0:17:46.240 --> 0:17:49.280 result of these shortages, what we're seeing is that the 0:17:49.440 --> 0:17:52.879 earliest we could not reach it. If these challenges, supply 0:17:53.000 --> 0:17:56.200 chain challenges extending to next year is beginning to look 0:17:56.240 --> 0:17:59.960 like and if it goes even further out, these four 0:18:00.000 --> 0:18:03.240 fatility goes further out, we could be looking at probably 0:18:03.359 --> 0:18:05.760 later in the decade. Right. So that is also the 0:18:05.880 --> 0:18:10.119 second way where we try to quantitatively assess what the 0:18:10.280 --> 0:18:14.800 impact of these higher prices would be on the electric 0:18:14.880 --> 0:18:17.399 vehicle consumer. So when I talked about the fact that 0:18:17.480 --> 0:18:20.480 I find out from your friends Collis family who have 0:18:20.640 --> 0:18:24.159 ordered an electric vehicle and asked them how the weiting 0:18:24.240 --> 0:18:26.280 game is going at the moment, and I'm pretty sure 0:18:26.320 --> 0:18:28.480 they will tell you that it keeps getting longer and longer. 0:18:28.920 --> 0:18:31.359 And two, at what points are we going to be 0:18:31.440 --> 0:18:34.600 able to attain a hundred dollar you know, a particular 0:18:34.640 --> 0:18:37.800 at our battery cost on average, and you realize that 0:18:37.920 --> 0:18:41.800 that access tended further than what we initially thought. And 0:18:41.920 --> 0:18:44.720 that is the point where we believe that evs will 0:18:44.760 --> 0:18:47.359 reach price priority with internal composting engine. And if that 0:18:47.440 --> 0:18:50.520 goes further out, then the mass abdorction of ev could 0:18:50.560 --> 0:18:54.520 potentially end up being delayed. So you mentioned as a year, 0:18:54.760 --> 0:18:56.600 and I just want to be really clear on that. 0:18:57.480 --> 0:19:00.159 And I know it's impossible to predict the future. We 0:19:00.240 --> 0:19:02.800 are trying to say, when do we all things remaining 0:19:02.880 --> 0:19:05.920 constant today, when do we think things may normalize? And 0:19:06.040 --> 0:19:09.040 I know in the natural gas space, for example, and 0:19:09.119 --> 0:19:12.400 we've covered that on this show. You originally it was, oh, 0:19:12.440 --> 0:19:14.359 it's going to be another two years, and then now 0:19:14.440 --> 0:19:16.600 that timeline is looking like it's it's it's kind of 0:19:17.440 --> 0:19:23.400 going further away. When all things constant you expecting start 0:19:23.480 --> 0:19:26.920 to normalize in the battery supply chain space or could 0:19:26.960 --> 0:19:29.800 it be significantly further out than that? So let me 0:19:29.960 --> 0:19:31.920 let me think I'll listener through it. Behind the scenes 0:19:31.960 --> 0:19:34.959 of very polt I published in January. Right in January, 0:19:34.960 --> 0:19:38.840 Bloomberg any of published It's fast Battery Metals Price Outlook, 0:19:38.840 --> 0:19:40.560 where we trying to look at where prices would be 0:19:40.800 --> 0:19:45.280 in twenty thirty and actually went on stage to confidently 0:19:45.640 --> 0:19:50.600 present these results at our San Francisco summit, so focused 0:19:50.640 --> 0:19:52.639 on batteries, right, like, that's one of the topics that 0:19:52.760 --> 0:19:55.240 comes up a lot of the San Francisco summit exactually 0:19:55.240 --> 0:19:57.920 and I confidently said at that time that base on 0:19:58.200 --> 0:20:00.640 where we have seen supply chains, and I'm we don't 0:20:00.640 --> 0:20:02.760 think that list. Your price at that time was forty 0:20:03.200 --> 0:20:07.240 dollars on average parametric m. We don't think that we 0:20:07.320 --> 0:20:09.800 will see it go higher. We potentially might have hit 0:20:09.880 --> 0:20:12.920 the roof at that time. Three months later, prices doubled, 0:20:13.200 --> 0:20:15.520 and then I have to do the hard and difficult 0:20:15.640 --> 0:20:18.919 job of presenting the reports to a clients every now 0:20:19.000 --> 0:20:21.159 and then. So what I did then there is that 0:20:21.480 --> 0:20:24.560 rather than use that report I saw a forecast of 0:20:24.600 --> 0:20:27.840 the future, I used it to teach our clients how 0:20:28.000 --> 0:20:30.760 not to forecasts. So I think that is how I'm 0:20:30.800 --> 0:20:34.359 going to answer your question, right, okay, so how not 0:20:34.520 --> 0:20:37.240 to poecast? So so what did you learn from that experience? 0:20:37.320 --> 0:20:40.400 Because again, you know, we can only make decisions, not decisions. 0:20:40.480 --> 0:20:44.119 We can only think about for looking scenarios based on 0:20:44.200 --> 0:20:46.960 the information we have today. But what were the moving 0:20:47.080 --> 0:20:51.440 parts that you now feel are potentially too volatile to 0:20:51.760 --> 0:20:55.159 be able to really confidently look too far out? The 0:20:55.280 --> 0:20:58.400 short term should not be deterched from the long term. 0:20:58.800 --> 0:21:02.120 They are they are. There are two parts really joined 0:21:02.160 --> 0:21:04.080 ot the hip right, and at that time we're pretty 0:21:04.119 --> 0:21:08.080 confident that nothing in the short term would matter dramatically 0:21:08.160 --> 0:21:11.520 to impart our long term average. Few a month later, 0:21:11.920 --> 0:21:14.760 the Russia War happened, and then it just change you 0:21:14.960 --> 0:21:17.040 organized supply chain against I think the key s and 0:21:17.080 --> 0:21:19.040 we learned is that you should one way or the other, 0:21:19.200 --> 0:21:22.119 find a way to connect the short term which our 0:21:22.160 --> 0:21:25.159 long term view, not just number one. Number two. We 0:21:25.280 --> 0:21:28.840 need to also understand that if the historical challenges, or 0:21:28.880 --> 0:21:33.200 if the historical factors that drove the market to where 0:21:33.240 --> 0:21:36.840 it is now have not been resolved, it's very important 0:21:36.920 --> 0:21:39.119 not to assume that the future is going to be different. 0:21:39.520 --> 0:21:41.080 And I think if we have thought about that a 0:21:41.200 --> 0:21:44.600 little bit more and realized that the overhang. Yes, I 0:21:44.720 --> 0:21:47.200 live in London and if you if you sat in 0:21:47.240 --> 0:21:51.119 the tube in London today, you probably assume that COVID 0:21:51.160 --> 0:21:53.879 doesn't exist anymore, right, But then if you go to 0:21:54.040 --> 0:21:58.960 countries like China where they are still aggressively enforcing policies 0:21:59.000 --> 0:22:02.159