Nickel Crunch Ahead? Why EV Manufacturers Are Watching Metal Markets Closely

The global electric vehicle (EV) revolution is accelerating, but a critical raw material is emerging as a key concern for manufacturers and investors alike—nickel. As demand for long-range, high-performance EVs grows, nickel has become an essential component in battery production. However, supply uncertainties and sharp price swings are raising questions about the sustainability of future EV growth.

The global nickel EV battery market is projected to reach $48.6 billion by 2035, expanding at a CAGR of 27.3% between 2025 and 2035. Yet, the path to this growth may not be smooth, as the industry grapples with supply chain challenges and increasing dependence on the metal.

Why Nickel Matters for EV Batteries

Not all EV batteries rely on nickel. Lithium Iron Phosphate (LFP) batteries, commonly used in affordable electric cars and two-wheelers, do not require the metal. However, Nickel-Manganese-Cobalt (NMC) batteries, which power premium EVs with longer driving ranges, are heavily dependent on nickel.

The importance of nickel in battery chemistry continues to rise. In 2025, global battery manufacturers reported an 8% year-on-year increase in nickel usage per battery pack, with the average reaching 25.3 kg. Demand is particularly strong in premium SUVs and long-range EVs, where higher energy density is essential.

Volatile Market Creates Supply Risks

Nickel's market dynamics remain highly unpredictable. Prices surged to nearly $50,000 per tonne in 2022 before collapsing to around $16,400 per tonne in early 2024. More recently, prices fell close to $15,000 per tonne in April 2025, marking a five-year low.

Indonesia remains the world's dominant nickel supplier and has significantly increased production in recent years. However, supply concerns persist after four of the country's five largest nickel producers were affected by licence cancellations. As a result, the market appears oversupplied on paper but remains vulnerable to disruptions.

The International Nickel Study Group (INSG) forecasts a surplus of 198,000 tonnes in 2025. However, prolonged low prices are discouraging investment in new mining and refining projects, potentially creating shortages beyond 2027 when EV demand is expected to rise sharply.

Global demand trends also remain strong. China alone consumed more than 340,000 tonnes of nickel in the EV sector during 2025, highlighting the scale of future requirements. Worldwide nickel demand from EVs is forecast to reach 1.4 million tonnes by 2030.

India's Growing Dependence on Nickel

India's EV ambitions are increasingly tied to global nickel markets. The country's battery manufacturing sector remains heavily dependent on imported nickel, lithium and cobalt, with most NMC battery materials sourced from China.

Gujarat, Maharashtra, Karnataka and Tamil Nadu accounted for 72% of India's installed battery manufacturing capacity in 2025. While domestic production capacity is expanding rapidly, raw material dependence remains a significant challenge.

Several companies have announced major investments in battery manufacturing. Ola Electric introduced India's first indigenously developed 4680 battery cells using high-nickel chemistry. Tata Group's Agratas established a 20 GWh battery plant in Sanand, Gujarat, while Reliance Industries is targeting 30 GWh of battery manufacturing capacity. Ashok Leyland has also committed more than ₹5,000 crore through a battery supply partnership.

India's EV financing market is projected to reach ₹3.7 lakh crore, or approximately $50 billion, by 2030. However, much of this growth depends on stable access to critical battery materials such as nickel.

LFP vs NMC: The Industry's Dual Strategy

To reduce exposure to nickel price volatility, many manufacturers are increasing their focus on LFP batteries. China's battery pack prices declined nearly 30% in 2024, partly due to the growing adoption of lower-cost LFP technology.

Despite this shift, NMC batteries remain essential for long-range passenger vehicles, premium SUVs and electric commercial vehicles. As a result, the industry is pursuing both battery chemistries simultaneously rather than choosing one over the other.

What Investors Should Watch

For investors, nickel is becoming a strategic indicator for the EV sector. Monitoring nickel prices, supply developments in Indonesia and policy changes in China will be crucial. Equally important is identifying Indian manufacturers that are securing long-term supply chains rather than relying on spot purchases.

Government incentives will also play a key role. Ola Electric became the first company to receive benefits under India's PLI-ACC scheme, receiving ₹73.7 crore in March 2025. However, several companies have sought extensions due to ongoing supply chain challenges.

As the EV market expands, nickel is evolving from a commodity input into a strategic asset. Companies that effectively manage nickel sourcing and supply risks are likely to be best positioned to benefit from the next phase of electric mobility growth.