Nissan just announced a 50% cut in production of its new electric vehicle, the Leaf. Now they’re cutting output in half due to ongoing battery shortages. This decision reflects broader challenges within the EV industry, as manufacturers struggle to secure sufficient resources to meet growing demand.
That reversal follows a year of extreme volatility in lithium prices, largely due to weak demand and market speculation. According to a recent report, Chinese lithium producers’ shares have tanked. This drop comes on the heels of news that the world’s largest battery manufacturer, Contemporary Amperex Technology Co., Limited (CATL), would be restarting production at a mine. The move to restart mining operations caused worries about oversupply, playing a factor in the downward lithium price trend.
China’s recent crackdown on lithium production was enough to send lithium prices skyrocketing. Suppliers and manufacturers quickly dropped to address the tightened regulations. Analysts are warning that this current price rally is unlikely to hold. As supply chains stabilize and more mining operations come back online, the market could see a correction that undermines the recent gains.
As we learned from Japan, Suzuki is betting on the uneven and ever-changing terrain of the EV market. The company was bullish last year that its electric vehicle debut would help “unlock a new market” within the country. This proactive step by Toyota, as Japanese automakers continue to pivot as they face a complex battery supply chain landscape with shifting material costs,
Nissan’s drastic production cuts, paired with Suzuki’s dream big or go home attitude perfectly demonstrates the dichotomy that exists in the industry. As a result, many manufacturers are reducing their operations due to resource limitations. At the same time, others are taking advantage of these new opportunities to experiment, innovate and diversify their offerings.
As the EV sector keeps growing, all stakeholders will have to keep a watchful eye on the effects that these changes bring. Lithium prices and production capabilities versus market demand are all intricately linked. These three elements combined will have a huge impact on the future of electric mobility in the near term.