Samsung's New Battery Technology Could Increase the Price of Silver

While the price of gold crossed the $2,500 level and is breaking new records in a row, the price of silver has not shown much growth. This may soon change, however, as Samsung achieved an important technological breakthrough that has the potential to significantly increase demand for silver, reports Kitco.

According to asset manager Kevin Bambrough, Samsung has developed a new solid-state battery . Since silver is also a very important component of this battery, and the boom in electric vehicles (EVS) continues, we will soon see an even greater demand for silver.

“Increasing driving range, faster charging, longer battery life and safety are driving the demand for electric cars,”

said Bambrough.

“Samsung’s new solid-state battery technology includes a layer of silver and carbon on top of the anode, which characterises its novelty. Since silver is an exceptionally good and stable conductor of electricity, it helps to improve battery life and capacity. It can achieve a range of 600 miles, a life of 20 years and a charging time of 9 minutes.”

Bambrough pointed out that while official numbers are not available at this time, various estimates suggest that each Samsung solid-state battery cell may contain up to five grams of silver. “A typical electric car battery consists of about 200 cells, and that would mean 1 kg of silver would be needed for that battery.”

The Impact on the Silver Market Could be Very Large

“Currently, around 80 million cars are produced worldwide every year. If 20 percent of them adopt Samsung’s new solid-state batteries, their demand would be 16,000 tons (16 million cars*1kg of silver per car),” explained Bambrough. “This would account for a very large proportion of current global silver production, which currently stands at around 25,000 tonnes. This reflects the extent of the impact on the silver market.”

According to him, this factor alone is enough to cause the price of silver to grow rapidly

And the solar panel sector is not even considered in this scenario.

“Added to this is the fact that the silver market is already in deficit due to industrial demand, mainly from solar panel manufacturers. The annual consumption is higher than the supply,” he explained. “So even now there is no silver that can be used in these batteries.”

The silver market has a large deficit this year for the fourth year in a row. Below is a breakdown of how big that shortfall is in millions of ounces. Converting ounces to tons, the Silver Institute predicts a shortfall of 6,719 tons for the market this year.

However, Bambrough said that 5 grams of silver per element may be too much. The fact that 20 percent of the cars produced will be electric cars may be an understatement. If you look 10-15 years ahead, this share may reach 50 percent or more.

Will An Ounce of Silver Reach $200

“This is another reason why the situation in the silver market is becoming even tighter. It is very likely that we will see the inflation-adjusted peak (about $200 per ounce) exceeded in the next 10-15 years,” he explained. “If the banks have a very large amount of bearish positions as they say, then it can happen much earlier.”

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With this comment, he referred, so to speak, to a short squeeze, which occurs when the price of an asset rises. If, for example, the price of silver begins to rise rapidly, investors who bet on the decline will have to start liquidating their positions. However, in order to liquidate the bets on the decline, the underlying asset must be bought instead – and if all the bettors on the decline suddenly start buying, the price will start to rise even faster.

“You only need to look at the silver price chart from the 1970s to see how explosive the price growth of the precious metal can be. If there is a serious shortage and speculators decide to start buying, it can turn out to be very explosive,” he concluded.

New Batteries Will be Mass Produced in a Few Years

RideApart author Enrico Punsalang wrote that Samsung is already working with major automakers to integrate its new SS batteries into electric car development. Samsung has signed an agreement with Toyota and will start mass production of battery manufacturing, of SS batteries in 2027.

Lexus vehicles will probably be the first to use this battery power technology

Punsalang said the rapid deployment of SS batteries is currently limited by the lack of charging infrastructure. “Such fast charging (9 minutes) also requires proper infrastructure. If you look at China, whose car manufacturers offer similar speeds, you need 480 or 600 watt chargers. Not even in China are there many such stations.”

“So the real question is not whether it is possible or possible. We know it’s possible. The question is how quickly the ultra-fast charging infrastructure can be built for the masses to use,” said Punsalang. “Then the question of costs arises. SS batteries are currently much more expensive to produce than Li-ion batteries – about three or four times. This is also the reason why Toyota plans to initially use the new batteries in Lexus, where the profit margins are much higher.”

“At the end of the day, the development of solid-state batteries is a win-win,” he added. “Of course they are very expensive now and require special technology, but 20 years ago SSD hard drives were also very expensive and HDD was normal. Now even boomers have SSD hard drives in their computers. Why shouldn’t SS batteries be the new standard for electric cars in 20 years?”

Will There be an Increase Similar To 2010

Charlie Morris, the founder of ByteTree, said that this new development could lead to a similar rally in the silver market as it did in 2010.

“It reminds me of the silver rally in 2010, when the price jumped to $50 an ounce thanks in part to demand for solar panels,” he said.

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“However, the solar bull market is back, and if solid-state batteries can capture the attention of the masses, silver will be the big winner,” Morris said. “Essentially, the price of silver moves in sync with gold, but it moves up faster in a rising market, especially if there is a good story behind it. I like the story.”

Key Takeaways

Samsung’s breakthrough in solid-state battery technology has the potential to significantly disrupt the silver market in the long term. As electric vehicles continue to gain traction, the demand for silver, a crucial component in these advanced batteries, could surge dramatically. This could place a strain on supply and demand.

With silver already in a supply deficit due to industrial demand, particularly from the solar panel sector, the introduction of silver-intensive batteries could exacerbate this shortage and drive prices upwards.

Experts suggest that silver could see a price rally similar to that of 2010, possibly even surpassing previous records if the market conditions align. While the mass production and adoption of these batteries will take time, the potential for rapid price increases in the silver market is clear.

As such, silver might soon experience a significant price surge, making it a commodity to watch closely in the coming years.