The Future of Electric Vehicles Lie in the Sourcing of Lithium and Cobalt for Batteries

by Vishnu Rajamanickam (Freight Waves) ... But unless the manufacturing process and the raw material sourcing is regulated and stabilized, it would be hard to sell EVs to the larger middle-class populace.

This is because the on-road price of an electric vehicle is much higher than its combustion engine equivalent, as the battery that runs an EV is expensive to produce. The current EVs run on lithium-ion batteries, which apart from the obvious lithium component, also utilizes cobalt - an extremely expensive metal, albeit used in far lesser quantities compared to the former.

The demand for lithium is spread out across different segments, with nearly 60% of its utility lying in non-battery related applications. ... DB (is) projecting the use of lithium in the EV industry to grow by nearly thrice its market share right now by 2025. McKinsey’s recent report suggests a similar scenario, forecasting that battery applications and the EV market would cover three-fourths of the global lithium demand by 2025.

More than 95% of the world’s lithium resources are mined as a primary product, occurring across South America, Australia, and Asia with massive reserves across ‘the lithium triangle’ in Chile, Argentina, and Bolivia. The control of lithium in the market lies majorly with four companies - Sichuan Tianqi Lithium Industries in China, the SQM of Chile, Albemarle and FMC corporation of the U.S. - jointly holding 98% of the market.

Though the situation of a few companies controlling global lithium supply sounds a bit ominous, the story of cobalt gets a lot worse. Unlike lithium, cobalt reserves are concentrated in a tiny stretch of land - the Democratic Republic of the Congo (DRC), a country that has been marred with civil tensions and a place where modern slavery and human rights violations are an everyday occurrence. More than 65% of the world’s cobalt supply comes from the country, forcing companies to be complicit to the tragedies unfolding in the mines. READ MORE

Excerpt from Clean Technica: The problem was Hyundai didn’t have enough batteries because LG Chem didn’t have enough batteries.

What seemed to be admission of the main cause was leaked in a company memo. The bulletin was originally posted to the IoniqForum.com website on April 21 by user “LLcoolB” from Ottawa, Ontario: “Over the 12 months since sales of the Ioniq Electric in the United States began in March of last year Hyundai sold only 544 of the cars despite an apparent backlog of pre-sale orders.

“Now, a premature ordering halt has been announced in a sales bulletin to dealers due to a Hyundai ‘temporary global battery supply shortage’ apparently from their battery supplier, LG.

“It now appears as though demand for the IONIQ Electric is far higher than anticipated. As a result, Hyundai is attempting to increase production on its side, but LG Chem won’t be able to match that with increase battery production, at least not immediately.”

As InsideEVs dryly notes, “This is a unfortunate reality that InsideEVs has explained on many occasions whenever OEMs tout the ability to quickly ‘increase production’ due to unseen demand (which as we know, rarely ever actually materializes) – without accounting for the fact they don’t have an existing commitment to a 3rd party battery supplier for those cells.”

While battery production volumes eventually ramp up, the increased demand results in delivery delays, as Norwegian customers have experienced with the Kona EV, with its rapid popularity.

There is financial risk in battery factory investment. There is also risk in being unable to access battery cells. Failing to have their own battery factories and expertise puts EV makers at a serious supply, cost, and battery performance disadvantage compared to those with secured battery supplies. READ MORE