Like other sectors of the economy, supply-chain issues on products and resources are a major issue for consumers, manufacturers, retailers and other businesses. And the same is true for the electric vehicle (EV) industry. Global supply-chain issues relating to the batteries and the minerals needed to produce them will only increase as countries, including the United States, move toward electrification of our transportation system. What does it mean for the future of EVs, and what are policymakers doing about these challenges?
According to the International Energy Agency, the number of EVs on the road around the world could jump to an estimated 250 million vehicles by 2030. From 2010 to 2019, the number of EVs on the road rose from 17,000 to 7.2 million. With countries, including the United States, establishing zero-emissions goals, large incentives for EVs, ICE bans and other regulations to transition to an electric transportation system, the demand for lithium-ion batteries used in EVs is only going to increase, along with the key components and minerals in these batteries, such as lithium, cobalt, manganese and nickel. These minerals also are needed in other technologies, such as computers and cellphones.
Why is this important? Affordability and manufacturing are two of the key factors that will determine how quickly people will adopt EV technology, along with charging infrastructure and battery range.
Though EV batteries can last 10 years, or about 150,000 miles, until they need to be replaced, battery manufacturers are struggling to secure supplies of key ingredients to these large power packs, especially cobalt and lithium.
Several studies have shown that the demand for lithium could exceed supply by 2022, which will drive up prices and interest in lithium mining. Demand for cobalt and nickel could exceed production in less than a decade, according to the same studies. Cobalt has the most supply risks, as it has a highly concentrated production and limited reserves. There are not many producers of cobalt, with a single company producing one-third of the world’s annual supply, and 65% of cobalt coming from a single country.
There also are geopolitical concerns. Most of the cobalt used in batteries today is claimed by China from mines in the Democratic Republic of Congo, which is known for human rights abuses and environmental degradation. The global lithium supply is also found in Australia, Chile, Bolivia and Argentina.
With limited reserves and suppliers, battery manufacturers have been researching ways to reduce the amount of minerals used to manufacture the batteries, but each alternative comes with a technical downside or creates new supply challenges with new resources. Each mineral plays an important role regarding the performance of the battery. Nickel boosts a battery’s energy density and range. Cobalt extends a battery’s lifespan and manganese helps a battery operate safer at higher temperatures. All work together to help deliver a long lifespan and range and high performance.
In the U.S. alone, the amount of lithium, cobalt and battery-grade nickel needed to electrify every light-duty vehicle on the road surpasses the total amount of these resources mined globally in 2019, according to a report on supply-chain vulnerabilities. In addition, the U.S. does not have the geologic reserves needed to meet its future demand for these minerals and metals.
As a result of both the domestic challenges and international challenges in the supply chain, President Joe Biden has created the Federal Consortium for Advanced Batteries, a cross-agency group headed by the U.S. Department of Energy. The consortium is identifying the supply and technical challenges in batteries used for EVs and is developing potential solutions to overcome those challenges. In addition, it has created a National Blueprint for Lithium Batteries to help guide the development of a domestic battery industry. Some issues being looked at include reducing the use of nickel and cobalt from lithium batteries, looking at responsible sourcing for those minerals and if they can be safely and securely mined and developed, research for recycling batteries and a wide range of other issues.
The issues surrounding the supply chain of EVs and EV batteries is just another example of the complexity in bringing alternative transportation technology to the marketplace.
How these issues are addressed and how quickly solutions can be implemented is an open question, but it will certainly have an impact on how quickly the transportation sector will transition to electricity.