Carmakers face a decade of costlier copper and nickel

Copper and nickel prices could roughly double over the next decade, according to a new report from trade credit insurer, Coface. But for carmakers and Tier 1 suppliers, this is in fact less a commodity story, than a cost-engineering one. Every motor winding, wiring harness, battery cathode and aluminium casting in a vehicle plant’s bill of materials sits downstream of the same tightening market.

The report, Back to the Future (Cycle), draws on production, consumption and price data from the London Metal Exchange, the US Geological Survey, the World Bank and the International Energy Agency. Its central finding? Supply is falling behind demand, and the gap looks far more structural than seasonal.

Growth that cannot keep pace

Coface expects supply to grow by just 0.4% a year for aluminium, 1.0% for copper and 1.5% for nickel. Demand, by contrast, is projected to rise by 1.8% a year. Those fractions look modest, but compounded over a decade they open a shortfall that coverage of the report puts at around 10% of demand for the three metals by 2035. Plant buyers do not purchase at the average, they purchase at the margin, and the margin is where prices move first.

Metallic foundations of vehicle plants

Nickel is the cell maker’s concern first, since it sits in high-energy cathodes, but the cost travels to pack assemblers and then to the vehicle line. Copper runs through traction motors, inverters, busbars and the harnesses that tie together increasingly electrified architectures. Aluminium appears in body structures, large castings and battery enclosures, while steel remains the backbone of the body-in-white. A price shock in any one of them lands on a different line item, which makes it harder to absorb through a single procurement lever.

Restrictions on the rise

Trade policy is, to say the least, adding friction to the carmaking ecosystem. By the end of 2025, 1,138 import and export restrictions on critical minerals were in force - up from 357 a decade earlier. This is more than a threefold increase. Each measure may be defensible on its own terms - yet together they make the physical movement of metal slower, costlier and harder to forecast, which is the opposite of what a just-in-time assembly plant needs.

Beijing’s hold on refining

China holds around 70% of refining capacity for 19 of 20 key minerals, and produces more than half of the world’s steel, aluminium and refined copper. But mining is one matter; refining another. A vehicle manufacturer can diversify its ore sources and yet still depend on one country’s refineries for the metal that reaches the plant gate. Sourcing strategies that stop at the first tier of the supplier map will miss this exposure entirely.

Mines move slower than model cycles

Fewer than 1% of exploration projects become working mines, and development timelines of 15 to 20 years limit how quickly output can respond to higher prices. A vehicle platform is planned, tooled and retired in a fraction of that time. The usual economic reflex, in which higher prices summon new supply, works on a clock that carmakers cannot wait out.

The copper stuck in America

Marcos Carias, North America Economist at Coface, says tariff uncertainty has left an unusually large amount of copper stuck in the US. Once there is clarity, he expects some of it to flow back out, which could actually push prices down in the near term. Meanwhile, companies are holding off on new US smelters and refineries until they know what the tariffs will look like.

So relief may arrive just as the long-term squeeze tightens, and the first may be mistaken for the end of the second. Carias is blunt about the implication when he says, “for manufacturers in the US, Canada and Mexico, that means planning for higher metal costs over the long term instead of waiting for a trade deal to bring prices back down.”

The AMS Survey: Steel buyers are already hedging

Steel sits outside Coface’s headline warning on copper and nickel, yet it is the metal carmakers know best, and how they buy it hints at how they may respond to the squeeze elsewhere. A survey by AMS, carried out with steelmaker SSAB, gathered 307 responses from OEMs, Tier suppliers and engineering firms in May and June 2026, with a margin of error of 5.56% at a 95% confidence level.

And price, as opposed to other variables, still rules the purchasing desk. Cost effectiveness was rated important by 86% of respondents choosing steel for automotive applications, ahead of strength and durability and weldability (both 84%) and manufacturability (83%). Cost was also the leading barrier to low-carbon steel, cited by 41%, although that was down sharply from 74% in the 2024 edition.

The more telling shift, however, lies in recycled content. Some 72% of respondents to the AMS survey now have a recycled steel target, up from 46% two years earlier, and 82% have an agreement with either a recycling company (39%) or a steel supplier (37%).

Meanwhile, one in five (20%) has gone further, with a closed loop arrangement with a steel supplier. The survey framed such deals as a sustainability measure - but they also work as a supply measure.

Sponsored

Download the Low-Carbon Steel Automotive Manufacturing Survey 2026 HERE

Get the latest industry data on adoption rates, purchasing priorities, carbon reporting, recycling targets and the key barriers to decarbonising automotive manufacturing.

A plant that controls its scrap returns depends less on the primary market, which is precisely the exposure Coface describes. If that mechanism spreads from steel to aluminium and copper, the next round of supplier contracts may look quite different.

Costing for a different decade

For engineering and purchasing teams, the question shifts from when prices will fall to how a design survives when they do not. Can a harness be redesigned to use less copper? Which castings could take a different alloy? Where does recycled content, secured early, become a hedge rather than a sustainability line?

Plants that answer these questions while metal is merely expensive will be better placed than those that wait until it is scarce.