Tesla Inc (NASDAQ:TSLA)‘s shift in its battery technology focus to lithium-iron-phosphate (LFP) is likely to prompt a major shift in the dynamics of the battery metals market, says UBS.
The US electric car maker announced the change in its battery cathode chemistry for standard range electric vehicles (EVs) in October.
UBS now expects LFP batteries to increase their share of EVs to around 24% by 2025, with the broker having previously expected the technology to lose out to nickel-cobalt (NCM).
Cobalt prices have been strong this year, rising 77% to US$28lb, the highest since 2018, but with the market now in balance the cobalt spot price is likely to fall said UBS.
Glencore has been a major beneficiary of the rise in the cobalt price as it produces 22% of the world’s supply, but even with the lower short term price expectation, it is still UBS’s most favoured cobalt play.
If prices do fall sharply, UBS believes Glencore and China Moly, the other major producer, as well as DRC state-owned EGC will quickly moderate supply growth
Glencore shares eased 0.8% to 368.9p.