Is the electric vehicle revolution putting a strain on battery raw materials?

August 26, 2022

The advanced deployment of electric vehicles (EVs) is the biggest change the automotive industry has seen since its inception. Car manufacturers are looking to reduce the overall CO of their fleet2 carbon emissions and preparing for a carbon-free future are using battery electric vehicles (BEVs) as an opportunity to follow a sustainable automotive path. However, this path is not without challenges, especially when it comes to the supply of raw materials for batteries.

EV batteries are based on lithium-ion constructions, made up of lithium, nickel, cobalt, copper and graphite. While the world is familiar with this technology, which has powered mobile electronics for years, every BEV will need a large supply of lithium-ion batteries to produce practical enough range.

Like the semiconductor industry, the automotive market now finds itself in competition with other sectors when it comes to securing the supply of raw materials needed to manufacture these batteries. While new technologies, such as solid-state batteries, can work without certain materials, they are still far from being viable alternatives. As governments and regulations push automakers down the road to zero emissions under tight deadlines, lithium-ion batteries are currently the only solution.

Are there enough raw materials?

For decades, fears have been raised that the world is running out of fossil fuels, prompting the search for cleaner energy.

Yet there are also questions about the viable amount of raw materials available for EV batteries. The problem is not one of quantity, as there are abundant quantities of materials needed. It is the ability to mine these materials that has some industry figures concerned.

In a recent webinar hosted by Automotive company, Isobel Sheldon, director of strategy at Britishvolt, pointed to the problem. “No matter how badly we want to find nickel in the middle of France or Italy, it’s all about geology, you find this material where you find it. Very often there are a lot of reservations.

“I heard a statement from a spokesperson for Benchmark Minerals last year that there is enough lithium on the planet to give all living people an electric vehicle for their lifetime. So while the issue of minerals is often portrayed as not having enough, it’s not, it’s about the ability to mine, refine and convert it.

Speaking at the same event, Nico Cuevas, Chief Executive Officer of graphite supplier Ubrix, added: “We believe there is enough raw material, geologically speaking, because graphite is abundant. But once you start connecting to the jurisdictions where these potential deposits are located, you need to start considering the requirements for mining. It depends on the location. For example, in the United States they are very pro-mining, but not as pro-mining as Canada.

For companies and countries looking to localize supply chains, including battery manufacturing, alliances are likely to become very important. If the ores cannot be mined in one place, trade routes will need to be established to ensure easier movement from the mine to the gigafactory.

Availability of materials at short notice

According to the pressure group Transportation & Environment (T&E), there is enough lithium and nickel available to produce 14 million electric vehicles worldwide in 2023, 55% more than current market projections. However, with competition to secure these materials around the world, governments must ensure they negotiate now or their markets risk being left behind.

“Despite what people say, there is no shortage of lithium or nickel in the earth’s crust. It is only a lack of political will that makes Europe vulnerable to supply shortages,” commented Julia Poliscanova, Senior Director at T&E.

By 2025, there would be enough lithium and nickel to build an additional 21 million BEVs, even if raw material supply tightens and remains below battery plant capacity, study shows from T&E. It would still be 50% more than market estimates.

But while this may allow an expansion of the electric vehicle market, the abundant reserves would not guarantee that Europe can emerge victorious in the race to electrify its market.

“As China and the United States show political strength to secure the supply of critical metals, European leaders are scouring the world for more oil,” Poliscanova added. “Now is the time to focus on sourcing the sustainable raw materials the continent needs for our energy independence and a green future.”

Importance of wedding rings

T&E’s warning highlights the need for an unrestricted supply chain, which also produces the lowest possible carbon emissions. For governments, this means negotiating with territories that have a high capacity for extracting materials to open up trade routes. That would leave automakers to work with governments to secure supplies for their own gigafactories or those of their partners.

Mercedes-Benz and the Volkswagen Group (VW) recently signed agreements to explore deeper cooperation at all stages of the automotive value chain – from technical development and raw material extraction to production, life life and recycling.

Part of the MOU will aim to ensure sustainable sources of raw materials in Canada, giving companies access to critical supplies for themselves or their partners.

“Mercedes-Benz seeks to open new avenues to responsibly acquire raw materials in order to rapidly scale up production of electric vehicles. Securing direct access to new primary and sustainable sources of raw materials is an essential step on this path. With Canada, Mercedes-Benz has a strong and innovative partner for a new era of sustainable transformation in the automotive industry,” said Markus Schaefer, Chief Technology Officer, Head of Research & Development and supply at Mercedes-Benz.

Olaf Scholz, Chancellor of the Federal Republic of Germany, commented on the VW agreement: “I am delighted that Volkswagen and Canada have today signed a memorandum of understanding on value creation for batteries. This is excellent evidence that cooperation with our close friends and allies in Canada is also deepening in the context of raw material security and could encourage other companies to follow.

Localized battery manufacturing will help reduce reliance on longer supply chains, but sourcing raw materials directly from mines and refineries into gigafactories will require more alliances, and regions will need to ensure they have signed agreements as they ramp up production.

Long-term raw material supply

Although plentiful, some reports suggest that there are not enough raw materials in global reserves to enable a global fleet of electric vehicles.

A published report last year by the Geological Survey of Finland suggested that with a global fleet of 1.4 billion vehicles, it would take 48.2% of global nickel reserves and 43.8% of global lithium reserves, but qu ‘there are not enough cobalt reserves to meet this requirement. Because the current electric vehicle market is small, there aren’t enough materials that can be refined through recycling to help ease the pressure on supplies.

However, this only concerns batteries for electric vehicles. The automobile market will have to compete with the electronics industry, which means that several sectors will draw on their reserves. According to the report, while there are enough global copper reserves, reserves of nickel, cobalt, lithium and graphite would struggle to meet demand if the global car fleet suddenly changes. If the average lifespan of an EV battery, around eight to ten years, is taken into account, the situation could become more serious.

It should be noted, however, that it will take many years for the global vehicle fleet to switch from internal combustion engines to battery power. Meanwhile, new technologies can reduce reliance on these materials. Solid-state batteries, for example, will reduce the amount of lithium and graphite needed, while offering longer ranges and faster charging. Hydrogen fuel cells will also use less of these feedstocks, easing pressure on global supplies.

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