As electric car sales soar, the industry faces a cobalt crisis. First it was lithium, now its cobalt. Electric vehicles need them for batteries, but supply issues will only worsen as demand rises. Electric vehicle sales are soaring, with factories working full-pelt to churn out as many batteries as possible. And that’s creating some bottlenecks.
Global production of electric vehicles is predicted to top four million cars globally this year, rising to 12 million in 2025. In Europe alone, 540,000 electric cars will be sold this year, an increase from 319,000 last year. For that to happen, we don’t just need gigafactories to build the batteries but also need to get hold of the key materials, notably lithium and cobalt — and the gold rush on both has already begun.
Last week, The Times reported that Jaguar Land Rover would pause production on the I-Pace, pinning the blame on shortages at battery maker LG Chem. Mercedes halved its 2020 production goals after shortages with the same supplier. “Currently EV uptake is arguably being constrained more by lack of manufacturing capacity than anything else,” says Paul Anderson, co-director of the Birmingham Centre for Strategic Elements and Critical Materials. “Lack of battery manufacturing capacity is a key part of this, which is why there is the rush to build gigafactories.”
A lack of gigantic factories is a problem that can be relatively easily solved. “In June 2019, there were 91 factories in the pipeline for producing lithium ion cells around the world, of which around half were already in production the previous year,” says Gavin Harper, research fellow at the Faraday Institution, a battery research group.
What isn’t so easily solved is the issue of getting enough raw materials out of the ground. “It’s been predicted that as demand for electric vehicles surges, there could be constraints around the key strategic elements and critical materials needed for EV battery manufacture in the future,” says Harper.
Aside from the usual hurdles of sourcing and extracting deposits and processing material for use, the key ingredients for EV batteries face geopolitical upheaval including trade wars, local protests, and raise human rights and environmental concerns. That will cause “structural undersupply,” says Andrew Leyland, head of strategic advisory at Benchmark Mineral Intelligence, and could wreak havoc on EV supply chains just as the industry is hoping to go mainstream.
Look at lithium. At the moment, we have enough – too much, in fact. While soaring prices of the core material in lithium-ion batteries sparked a mining rush in Australia, Argentina and Chile and – which between them provided 91 per cent of supply in 2017, says Harper – a slump in demand caused by a weak automotive market and a reduction in grants for buying such cars in China has slowed the pace of mining and processing plant construction.