Does it Correlate with Carbonate?
Finding empirical relationships in our recent Li-ion battery component cost tracking data
In March we launched The Battery Component Price Report. Now we’re analyzing how the rollercoaster lithium carbonate prices have affected other battery sectors.
First, shout out to the BCPR
Every month since March 2023 we’ve been publishing the Battery Component Price Report (BCPR), which has seen really enthusiastic uptake by major industry players.
Beyond the typical $/kWh cell costs, this report goes to the next level by also including cathode materials, lithium, anodes, electrolytes, precursors, separators, current collector foils, and more.
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Does it Correlate with Carbonate?
Lithium carbonate prices have been on a rollercoaster ride in recent months. While "only” ~200 g/kWh of lithium is used in batteries, that lithium is distributed differently: there is far more lithium in LFP powder than there is in the polymer separator. In fact, there is no lithium in a battery separator.
We looked at the empirical relationship between battery component costs and the cost of battery-grade lithium carbonate (Li2CO3) over the past few months. This is done with statistics by calculating the Pearson correlation coefficient, we’ll cover how this is done below, but for now just know:
1 = perfect positive linear relationship
0 = no linear relationship at all
-1 = perfect negative linear relationship
Let’s jump straight into the ranking:
Understandably, carbonate prices track most closely with carbonate. Though LiOH appears much lower in the ranking, which may be a recent anomaly where LiOH and Li2CO3 prices have been flip-flopping (see Fig. 2).
NMC532 has the highest correlation factor out of the cathode materials. This is higher than LFP and LMO which technically have a higher cost proportion owing to the Li2CO3, implying they should have more exposure to lithium cost fluctuations. After all, LFP and LMO precursors are FePO4 and MnO2, much cheaper than nickel and cobalt. NMC811 and NCA have higher processing costs so the LiOH/Li2CO3 costs appear to have a lower impact.
LiPF6 salt costs correlate with overall lithium costs but not as much as other Li-containing materials, probably due to the inelastic nature of having to deal with HF in the synthesis.
Not sure what’s going on with cobalt sulfate, but everything from “separator” downwards with a coefficient <0.6 shouldn’t have any direct causal relationship between Li2CO3 costs and their own material costs. As this only tracks data over 3 months, there may be some confounding factors between macro battery material market demand and or macro battery material production surplus/shortages.
Behind the scenes:
Behind the scenes of the Figure 1 Pearson correlation rankings, there are several things going on. We’ll go through an LFP-specific example to demonstrate:
First, we look at how lithium prices have been changing via Fig 2. We can see the clear “bounce” from $55/kg down to $25/kg and now back up to $45/kg as of June 2023.
Next, we can look at LFP prices over this same time period. LFP seems to follow a pretty similar trend from $18/kg down to $11/kg and now back to $14/kg.
Then, by plotting LFP prices together in a scatter plot against battery-grade Li2CO3 costs, their correlation gets mapped out in Fig 4, showing a clear positive linear relationship:
Pearson’s Correlation Coefficient
The Pearson correlation coefficient tells you about the linear relationship between two variables. It doesn't tell you about causation or other types of relationships. Pearson’s coefficient gives you a good idea of how connected or independent the variables are.
If Li2CO3 costs are given variable x and LFP prices are given variable y, both with n observations, Pearson’s r can be calculated following this equation, where the mean of both sets of x & y are subtracted from their respective terms:
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