Will Battery Raw Materials Be Able to Meet Demand for Future Electric Vehicles?

by Wall Street Rebel - Michael London | 02/03/2023 9:35 AM
Will Battery Raw Materials Be Able to Meet Demand for Future Electric Vehicles?

There are still many unknowns that might affect manufacturing. Massive expenditures are required to establish the mining operations and gigafactories necessary to support the worldwide production of batteries.


The global demand for electric vehicles and other electronic devices is on the rise, necessitating an increase in the production of electric batteries. Several factors, including the Covid pandemic's effect on the supply chain and growing demand for lithium that hasn't kept up with supply, have contributed to companies falling short of their production expectations. Due to these stresses, prices have risen dramatically over the last several years, and many once-promising businesses have folded as a result. There is a growing consensus in the United States that the present battery shortage poses a danger to national security because it might undermine the country's attempts to accomplish a green transition.

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Nearly a 30% rise to 4,500 GWh by 2030 is projected for global battery consumption. Because of this growth in demand, the battery value chain may make $410 billion in revenue per year. Moreover, 40% of this need will fall on China alone. Immediately, the energy sector and the car industry will need to work together to supply the increased demand for lithium-ion batteries throughout the globe. However, they should be prepared for a number of challenges that could prevent them from scaling up production, including a scarcity of labor and raw materials, the time required to develop battery production gigafactories, fierce competition for scarce resources, and resource and product shortages, such as those currently seen with lithium and semiconductor chips. Companies must ensure they align with international environmental, social, and governance (ESG) standards as regulations become more strict.

A large proportion of the batteries used in the initial generation of electric cars will need to be replaced in the future, adding to the current demand. It is estimated that 12 million tonnes of lithium-ion batteries will need to be retired and replaced between now and 2030. These forecasts originate in the year 2021. This demonstrates the interminable need for electric batteries and the potential for a large amount of electrical waste, the manufacturing of which would require the use of a large amount of raw materials like lithium, nickel, and cobalt.

Some industry professionals believe that we are not even close to being prepared to transition to the widespread use of electric vehicles, despite the fact that there has been a significant push from international organizations and governments all over the world to get the electric vehicle transition started.

This may sound like an extreme viewpoint, but the United States now imports over 90 percent of its lithium from Argentina and Chile while only generating 1 percent of the world's nickel and cobalt supply. During this time, China is responsible for refining around sixty percent of the world's lithium and eighty percent of its cobalt. It also manufactures about 70 percent of the world's lithium-ion batteries, which means that many nations throughout the globe are dependent on China for the creation of their electric vehicles. Following Russia's invasion of Ukraine, this is the same kind of reliance that a number of different nations are working very hard to reduce or eliminate.

Much of this seems bizarre when put in context with the extensive coverage of recent advances in battery production, increased metal and mineral output, and the rise of innovative new firms. Global media outlets have been eager to highlight companies who boast about their revolutionary battery advancements, despite their lack of understanding of the full extent of the issue. Nonetheless, some startups have been accused of exaggerating their "breakthroughs" to attract more customers and investors. Given these challenges, it's not surprising that some promising electric vehicle (EV) and battery startup firms have failed.

No company can sidestep the difficulties that are inherent to the market. In an already costly and highly competitive industry, the cost of producing electric vehicles (EVs) has skyrocketed due to rising material prices over the last several years. As a result, lithium, nickel, and cobalt prices have all climbed throughout this period. In recent years, shortages have been seen, and it has been difficult to get essential battery components due to supply chain bottlenecks. Growing pressure from national governments that want to lessen their reliance on major mining powers like China further complicates an already difficult situation by compelling automobile manufacturers to search for domestic suppliers or, at the very least, diversify the types of goods they import.

The electric battery's future prospects are murky at best. However, as governments push for a rapid transition from vehicles powered by fossil fuels to electric vehicles, it is unclear if the battery manufacturing industry will be able to keep up with demand. There are still a number of threats to production, and huge investments are needed to set up the mining operations and gigafactories required to facilitate the global manufacture of batteries. Despite this, progress is still rather slow compared to the ambitious targets that governments worldwide have set for producing electric cars.

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                       Will there be enough EV Battery Material?


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