Impending Key EV Battery Material Shortage Threatens Industry and Low-carbon Shift
A new challenge is emerging in the Electric Vehicles (EV) industry. The impending shortage of key EV battery material casts a shadow on its growth and poses a potential disruption to the delicate balance of supply and demand. It also challenges the low-carbon transition, as cleaner energy relies on making lots of batteries.
Addressing these supply chain concerns is crucial for the success of the green transition, ensuring a smooth and sustainable future for EVs and the broader low-carbon agenda, according to GlobalData, a prominent data and analytics company.
This data company’s latest report, Batteries – Thematic Intelligence, talks about batteries for electric cars. It says there are six parts to making these batteries. One important part is the raw materials. These materials are crucial for making batteries for electric cars. This is especially important because governments around the world are working to make their economies decarbonized and eco-friendlier.
Thomas Pothalingam, thematic intelligence analyst at GlobalData, said: “The lack of low-cost, easy-to-purify raw materials to feed the world’s existing and planned battery gigafactories is the biggest threat to supply security. Demand for cheap, safe, high-performance, long-lasting, and low carbon footprint batteries will soar in the next 10 years – most notably from the automotive industry, as reported by JustAuto.
“Both the battery and EV industries will have to work closely with the public sector, capital markets, and other stakeholders to scale cheaper, longer life, cleaner, and more recyclable batteries, battery components, and battery materials. New factories will be required.”
How much Battery industry grow?
GlobalData predicts a robust 12.5% compound annual growth rate in lithium-ion (li-ion) battery industry revenues, climbing from $88.6 billion in 2022 to an estimated $408.3 billion by 2035. This growth is primarily fueled by li-ion battery sales for electric mobility, with additional substantial year-over-year expansions in consumer electronics and energy storage.
As electric vehicles increasingly influence the battery sector, automakers play a crucial role in selecting battery chemistries that align with consumer usage patterns. Overcoming concerns about the electric vehicle range remains a significant barrier to widespread adoption, emphasizing the need for strategic technology investments that resonate with consumer needs. The forecast underscores the central role of electric mobility in driving industry growth, with a simultaneous emphasis on addressing practical concerns to promote the broader acceptance of electric vehicles.
EV Revolution Sparks Gigafactory Growth, Recycling for Sustainability.
The global shift to electric vehicles (EVs) requires expanding battery gigafactories near vehicle assembly plants, says Pothalingam. Establishing these gigafactories for the EV revolution attracts foreign direct investment (FDI) and addresses the insufficient capacity of existing factories to meet future demand, necessitating significant capital expenditure.
GlobalData predicts CATL, BYD, LG Energy Solution, Panasonic, Samsung SDI, and SK Innovation will dominate the mid-term market, controlling nearly 90% of global production. They are forming close ties with major auto companies, limiting startup potential for innovation.
US Pursues Recycling Independence Amid China’s Battery Dominance
Notably, China currently holds a dominant position in the realm of EV battery material extraction and processing. This is important because countries like the United States want to be less dependent on China. To do this, they’re looking into battery recycling. This helps in two ways. First, it’s good for the environment by reducing the impact of making and throwing away batteries. Second, it’s a way for these countries to use materials again instead of relying on other countries, especially China.
Pothalingam emphasizes the crucial industry trend of scaling up battery and battery materials recycling by 2030, creating a circular battery industry. This approach reduces reliance on mined materials, mitigates ecological impact, and aligns with recycling initiatives in the US, Europe, China, and Norway. Using recycled materials minimizes market volatility related to mining factors, aligning with emissions disclosure rules and green finance access.
