Electric vehicles can cause a price shock for keen buyers, primarily due to the battery costs. China’s aggressive capacity expansion on batteries is two-pronged. Costs are falling, but at a time when domestic sales for EVs have lost energy. This has diminished China’s demand for cobalt and nickel, key battery inputs.
This has been bad news for Belgium’s Umicore, maker of battery cell cathodes. Its share price has fallen more than a third this year. Lower input prices affect its own revenues just when it needs to invest heavily in new western battery supply capacity. Flattish profits in its mainstay catalytic converter business for internal combustion cars have not helped matters.
Umicore took action on Tuesday. A glut of cathode material has led the group to revise capacity expansion plans lower. Its depressed share price rebounded 13 per cent.