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Comment by bryanlarsen | Hacker News Reader

That's contrary to conventional economics -- costs fall as production increases.

How is this contrary to conventional economics? Using the most basic model of supply and demand, EVs becoming more popular would shift the demand curve to the right, since more people would want to buy Li-ion batteries at any given price. We would expect the market equilibrium to shift both upward and rightward, increasing both quantity and price. It might only shift only one way or the other, if supply is particularly elastic or inelastic. But it definitely wouldn't cause a decrease in price by itself.

https://en.wikipedia.org/wiki/Experience_curve_effects

The effects of experience curves vary widely between different industries. For semiconductors, it's huge. For mining, not so much. Battery costs are only 25% manufacturing. So at this point, battery supply is rapidly becoming a resource extraction problem.

The scale effects in mining are very significant. Big mines are a lot cheaper per tonne than little mines.

This is no longer a question of economic axioms, but of the facts on the ground. How do we know that the scale effects relative to lithium mines as they stand today will be sufficient to offset the price increase inherently caused by the increased demand? Do you have a source for this?

The increased demand only causes a temporary increase in price. Lithium is a commodity, and for commodities price == marginal cost.

The marginal cost for lithium is about 1/10th of the current price, so the price of lithium will eventually fall.

Of course "eventually" could be a long time away...

Then why is cost up 10x over the last two years?

Price is up 10x. Cost hasn't changed.

Cost is literally another word for price - I'm not sure what you're trying to convey by trying to distinguish the two. When a battery manufacturer goes to buy a ton to lithium, the cost they have to pay has indeed increased 10x.

The price of extracting a ton of lithium from the ground may be the same, but it's not enough to keep up with demand. Which is why the cost of lithium on the market is skyrocketing.

Price is up because it takes 18-24 months to produce lithium on the margin. The primary source of lithium is solar concentrated brine, so today’s supply is peak Covid planning decisions.

The people that had the guts to invest in lithium production in the middle of Covid when the price was in the tank, are currently harvesting that lithium and getting a massive payday.

Price will come back down.

This is predicated on the assumption that Lithium is a scarce resource with new new sources available. In fact the opposite is true: Lithium is pervasively available almost everywhere[1], the problem is that it's expensive to extract and requires a bunch of processing facilities be built.

So you'd absolutely expect Li supply to grow along with demand and push prices down due to economies of scale. And that's exactly what we're seeing.

[1] Basically, go find a salt deposit -- that's a dried up ocean, which is the best concentrator we can find for Lithium compounds.

I think the reason hydrogen storage costs won't fall much is because the cheapest technology (metal tanks) have already benefited from economies of scale. The parts that make them suitable for hydrogen storage specifically will get cheaper, but it's unlikely that there's a lot of low hanging fruit for manufacturing the tanks themselves. There could be a breakthrough in metal hydride storage or cryogenic storage that could reduce costs, but I'm not too optimistic. I think the most likely scenario is that most electrolyzed hydrogen is converted to methane for storage and use. Methane is much easier to convert to liquid and much more energy dense, which helps with storage costs.

Lithium prices should fall dramatically in the future as production increases.

And the rest of metals? Nickel, copper?

Storage batteries are moving rapidly toward a LiFePO4 chemistry that doesn't require rare resources. You can buy cars (even Teslas) and home batteries with them already.

Only a matter of time before phosphorus becomes as expensive as nickel or copper and you are back on the beginning with lack of materials for batteries.

> Earth's commercial and affordable phosphorus reserves are expected to be depleted in 50–100 years and peak phosphorus to be reached in approximately 2030.

https://en.wikipedia.org/wiki/Peak_phosphorus

No, phosphate is vastly cheaper than battery metals. I mean, yes, we're using way too much of it (for agriculture, in a manner that ends up unrecoverably flushed into the oceans). And we're going to hit a wall, and its price is going to skyrocket. But to matter to a battery producer it would have to be so expensive that we'd have all starved anyway. The price levels between batteries and fertilizers are just too different.

> No, phosphate is vastly cheaper than battery metals

Lithium used to be cheap. Is not anymore. Phosphate will go same route. That's the whole point.

I repeat: if phosphate was so expensive as to make a significant portion of the material cost of a LiFePO4 battery, then we would have long since starved for lack of crops. Relative to food, batteries are an extraordinarily expensive luxury good.

That is not necessarily true for minerals, which are mined not produced.

https://tradingeconomics.com/commodity/lithium

I think causality works better the other way - production increases as costs fall.

Edit: LegionMammal has the right words, demand curve.

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