Cobalt’s Future in Chinese EVs

A recent article by the CRU Group highlighted the growth in demand for cobalt.
As quoted in the article:

CRU estimates that the Electric Vehicle (EV) sector will consume around 4% of the world’s refined cobalt units in 2016. Whilst the industry remains in its infancy it is expected to drive much of the demand growth for refined cobalt units – in the form of battery grade cobalt sulphate.
Over the last ten years, increasing demand for Li-ion batteries in modern technology applications such as laptops, smartphones and tablets has transformed the cobalt market from a predominantly metallurgical to non-metallurgical market. The growth of the EV sector is perpetuating this trend – with Li-ion batteries now expected to consume over half of the world’s refined cobalt units by 2021.
NCA (Nickel-Cobalt-Aluminium) and NMC (Nickel-Manganese-Cobalt). These cathode ternary materials typically contain 8% to 18% cobalt.
However, domestic pure EV production and sales appears to be shifting towards cobalt-bearing technologies.
CRU estimates that China will produce around 440,000 EVs and PHEVs in 2016.
However, the new range targets and government plans to ease restrictions on NMC and NCA battery usage in buses in 2017 could result in major bus battery producers such as ATL-CATL and BYD focusing more of their attention on cobalt-bearing technologies.
We believe that the new rules will lead to more sustainable EV sector growth in China and will help shift domestic production towards higher quality vehicles that use cobalt-bearing battery technologies.
In the longer term, domestic LFP producers such as BYD could also increase production of new NCA and NMC batteries, providing they can secure additional cobalt units in the tightening market.
In China, the increasing popularity of NMC and NCA batteries could help triple cobalt demand in China’s EV battery manufacturing sector to over 8,000 tonnes by 2021 (in the form of battery grade cobalt sulphate).
CRU believes that China will maintain its hold as the world’s leading producer of refined cobalt chemicals and battery precursor materials. As a result, CRU expects an increasing proportion of the world’s EV battery manufacturing to take place in China in order to limit production costs.