- Aug 19, 2009
When economies of scale don't work: could OPEC model lead lithium producers to keep prices high?
Forbes caught my eye. He writes:If there's one repeated refrain we hear about the high price of advanced lithium batteries that are needed for the mass adoption of pure electric cars, it's that economies of scale will one day make the packs reasonably affordable. This seems a likely scenario, but is it inevitable? A paragraph in a recent column by Jerry Flint in
Given what we know about lithium, does a continued high price seem reasonable to you? Bolivia has about half of the world's estimated lithium reserves, so what happens there will have a tremendous impact on how the global lithium economy sets rates. We've already heard Bolivian president Evo Morales call for a state-dominated lithium industry in order to ensure that the profits benefit the people of his country. This seems fair, up to a point, but following the OPEC way of constantly driving up prices through the years won't make Bolivia a lot of friends.There's the legend that with mass production the cost will go down. Maybe, but that's bunk when it comes to certain materials. Take oil. Production is way up from the old days, and so is the price--I remember $3 a barrel, but now it's around $70 today. Indeed, OPEC might be a model for LIEC, a lithium ion producers' cartel, when they realize how important it is.