Lithium-ion batteries are a crucial part of our lives, from powering our phones to laptops and now the EVs, these batteries are everywhere. The demand and, consequently, the price of these batteries have increased due to the high demand brought on due to the EV transition. The Global EV sales grew from the year 2017 onwards, and soon companies like Audi and Jaguar Land Rover had to bring their production rate down due to the lithium-ion battery supply bottlenecks.
Reasons behind the Battery Shortage
The global adoption of the EV is increasing at the quickest rates: it is expected to break records this year by producing 4 million cars despite the corona slowdown and is expected to reach as high as 12 million by 2025. However, 2022 is anticipated as their tipping point, after which these cars will become cost-competitive when it comes to their ICE internal combustion engine counterparts.
The supply of EV batteries is facing many obstacles that include environmental concerns and the rising costs when it comes to the processing and extraction of the key metals involved. The demands and supply of the battery and its materials can go through ups and downs due to underestimating or overestimating its demands at one point or the other that can impact EV manufacturing.
For instance, cobalt mining is concentrated in just a single country, the Democratic Republic of Congo DRC, which is responsible for 65% of the global supply. DRC is among the least developed countries and hence has little transparency regarding the transparency of the cobalt value chain. Many reports have detailed the hazards of the mining industry of DRC that include child labour, human rights abuse, and even dangerous working conditions. Yet, the demand for this element is expected to reach as high as 430,000 tons in the coming decade, which is a 1.6 fold increase compared to today’s demand.
According to the current trends, a shortage of cobalt is expected in the near future. The current mining capacity mining may not be able to meet the growing demands due to the EV production spike.
Lithium is another material crucial for the batteries, which doesn’t face any mining shortages, but its rising prices have caused a rush in Argentina, Australia, and Chile. Then the global decrease in EV demand resulted in slowing down the mining pace. The suppliers also need to address their ethical sourcing.
Fortifying Supply
EV sales are predicted to grow in the current decade. Hence, car manufacturers will have to find a way to make sure that the supply of lithium and cobalt is continuous or find workable alternatives. Tesla has agreed to buy and use lithium phosphate batteries, which is a great alternative for cobalt batteries, for compensation. This decision by Tesla has sent a clear signal to the global market. As a consequence, General motors announced to source their nickel and lithium from North America for their new EV range for countering the Chinese supremacy in the lithium market.
New ways of extracting and mining lithium are also coming forward. Tech companies like EnergyX are testing the nanotech membranes, which allow for efficient refining and extraction of lithium. If the experiments are successful, it can result in an enormous boom in the supply chain of lithium.
In a nutshell, the government, as well as the car manufacturers, need to take steps for a sustainable supply of batteries and their components. Get more information regarding Electric vehicles and their training at MTC.
