Fastmarkets launches battery raw materials risk matrix to help market participants mitigate business risk

Fastmarkets, the industry-leading cross-commodity price reporting agency (PRA), announced the launch of its battery raw materials (BRM) risk matrix. The electric vehicle (EV) is critical to automakers’ growth and the global transition to a low-carbon economy. But varied, dynamic BRM risks may hinder EV market growth. The Fastmarkets’ BRM risk matrix is a graphical representation of the risks arising from the BRM supply chain. It has been developed to help planners and decision-makers understand, anticipate and mitigate business planning risks.

The Fastmarkets’ BRM risk matrix assesses ten risks that can impact the battery and automotive markets in the 2022-2025 and 2025-2030 periods. It assesses the likelihood and possible impact of risks, and how those risks are expected to change over time. The ten risks are:

1. Price volatility at elevated levels complicates financial performance
2. Supply deficits hold back overall EV growth
3. ESG concerns complicate local supply
4. Geographic concentrations create supply and logistics risk
5. Limited scrap holds back recycling as a supply source
6. Insufficient charging infrastructure slows EV adoption
7. Aged price mechanisms hinder investment
8. Growth in the use of indexing complicates the path to $100/kWh
9. Inability to clean up supply chains creates reputational risk
10. Geopolitical tensions disrupt production and logistics

The success of EVs is a key determinant of whether automakers can thrive, survive, or fall behind in the next 10 years. Battery raw materials will play a central part in that dynamic. Fastmarkets’ BRM risk matrix is a working, living framework to help battery makers and automakers proactively and systematically understand, anticipate, and mitigate risks.

“Business leaders need to be extremely attentive to the risks in the BRM market in making decisions on battery composition, how to hedge against price volatility, and how to gain leverage on the supply chain,” said Fastmarkets CEO Raju Daswani. “Building and winning in the EV market will increasingly be determined by the ability to actively manage the risks that will undoubtedly shape this market.”

To dig deeper into these risks and engage with our experts, please participate in our BRM risk matrix discussion on May 4, 2022.