Because of the increasing demand for electric Vehicles (EVs), Lithium is a key component in the global supply chain.
According to the International Energy Agency, there is a risk that the world will face a shortage of Lithium in 2025. Credit Suisse believes that demand for electric vehicles and Lithium could triple between 2020-2025.
According to the IEA, there are approximately 2 billion EVs that must be on the roads by 2050 in order for the world to reach net zero. But sales last year were just 6.6 million, and some carmakers are already out of EVs.
Surging demand for electric vehicles and Lithium poses challenges, as well as the fact that resources are concentrated in few areas, and more than half of current production is in high-water stress areas.
Future developments in batteries and manufacturing techniques could help to alleviate some electric vehicles and lithium shortages.
What’s soft, shiny-white, and can make it harder for the planet to go green?
This may sound like the beginning of a joke, but it’s not. The answer to this question is Lithium. However, the bad news is that the world may not have enough Lithium to power all its electric vehicles (EV) lithium battery needs.
Electric vehicles and Lithium, a non-ferrous metal also known as “white gold,” is one key component in EV batteries, along with nickel and cobalt. However, rising demand is putting pressure on global lithium supplies.
According to the International Energy Agency (IEA), global EV sales will increase to a 6.6million in 2021, from 3,000,000 a year prior. This means that EVs now account for 9% market share. They contributed to all the global growth in car sales, which grew to 66.7 million in 2017, up from 63.8 million in 2020. This means that non-EV sales dropped by 700,000.
The future will see sales of petrol and diesel cars drop even more as more countries promise to phase them out. At the COP26 climate negotiations last year, 30 governments stated that they would cease selling new petrol and diesel cars by 2040.
What is the recommended amount of Lithium an EV needs?
A single lithium-ion car battery pack contains approximately 8 kilograms (kg) of Lithium, according to the US Department of Energy research center Argonne National Laboratory.
Global lithium production reached 100,000 tonnes (90.7 Million Kilograms) last year. Worldwide reserves, however, are approximately 22,000,000 tons (20 Billion Kg), according to US Geological Survey.
Dividing the production of Lithium by the required amount per battery shows that there was enough Lithium to produce just under 11.4million EV batteries last year. This shows that demand is likely to rise as annual electric vehicle purchases increase since first-quarter sales rose 75% over the previous year, reaching 2 million, according to an IEA report.
That shows that global resources are sufficient to produce less than 2.5 billion of these batteries. To reach net zero, 2 billion electric, plug-in hybrid, and fuel cell light-duty vehicles will be needed by the world by 2050, according to the IEA’s Net zero by 2050 roadmap.
However, not all Lithium from the world can be converted to EV batteries. This metal can also be used in batteries for other items such as mobile phones and laptops, as well as to build planes, trains, and bikes.
Potential pitfalls of lithium mining
The world’s lithium resources are sufficient to supply the anticipated rise in demand. However, this assumes that all reserves can be made into production and that all are good enough for batteries. This is highly unlikely.
The IEA states that only a small number of companies are capable of producing high-quality, high-purity lithium chemical products. Although there are many expansion projects planned, it remains to be seen how fast their capacities can be brought online.
According to the IEA Report, The Role of Critical Minerals for Clean Energy Transitions, lithium mines that began operations in 2010 to 2019 took an average of 16.5 years to develop. McKinsey says that more than 80% of mining projects are not completed on time.
The IEA predicts that the world will face a shortage of Lithium in 2025. Credit Suisse claims that lithium demand could triple between 2020-2025, meaning that there would be a shortage of the commodity.
Transport and Environment Campaign claims there isn’t enough Lithium to produce 14 million EVs by 2023, Reuters reports. The trajectory of EV sales could mean many buyers are left without a choice.
Lake Resources Chairman Stuart Crow stated to the Financial Times that there wouldn’t be enough Lithium. “Regardless of who expands and delivers, it just won’t be there,” he said. “Car manufacturers are beginning to notice that battery makers may not be able to provide the promised results,” Crow said.
Volkswagen, the world’s 2nd-largest car maker, has already sold out of EVs for Europe and the US in 2022. Ford’s E-Transit van sold out before production had even begun.
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Different Lithium supply lines
A concentration of lithium resources in one area could also be a problem for getting Lithium out of the ground and into electric vehicles all over the world.
Stuart Crow from Lake Resources stated that China owns 70-80% to 80% of the entire supply chain in electric vehicles and lithium-ion cells. China has a 60% share in global lithium chemical production. It also accounts for 80% of lithium hydroxide output. According to the IEA, five large companies are responsible for three-quarters of global production capacity.
According to the US Geological Survey, Australia had the highest lithium production in 2021. But, Chile has the greatest lithium reserves. This South American country, along with Argentina & Bolivia, is part of the so-called Lithium Triangle. These three countries account for just below 60% of Earth’s lithium resources, according to the Mineral Commodity Summary 2021 US Geological Survey.
However, lithium extraction involves a lot of water. This is causing problems around water stress.
This is especially worrying considering the fact that much Lithium is found in regions where there is a lot more drought than usual, like South America and Australia. Bolivia’s San Cristobal mining operation reportedly consumes approximately 50,000 liters of water per day. Chilean lithium mining companies have been accused of depleting essential water supplies.
The IEA states that more than half the world’s current lithium production takes place in areas of high water stress. “Several important producing regions, such as Australia, China and Africa, are also vulnerable to extreme heat, flooding, which makes it more difficult to ensure reliable and sustainable supplies,” the IEA adds.
Protests led to the withdrawal of licenses for a Serbian lithium mine this year. Demonstrators said that the site would pollute water supplies and irreversibly alter the landscape.
Rethink and recycle
EVs are still a new market. Therefore, there could be future developments in batteries or manufacturing methods that will alleviate possible lithium shortages.
“Emerging technologies like direct lithium extraction or enhanced gold recovery from waste streams and low-grade ores offer potential for a step change in future supply quantities,” the IEA stated in The Role of Critical Minerals.
According to the report, the number of EV batteries that have reached the end of their initial life expects to rise after 2030. These could be recycled to reduce lithium demand by around ten percent by 2040, according to the report.
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The World Economic Forum offers a similar prediction in its report, A Vision to a Sustainable Battery Value chain in 2030. According to the report, 54% of batteries that are no longer in use will be recycled in 2030.
The supply problem may be alleviated by a new second-hand market for electric cars. Bloomberg reports that China is actively developing a second-hand electric car market. It claims that sales of such cars almost doubled between 2017 to 2020 and rose to 47,000.
The UK’s second-hand EV sales more than doubled between January and March compared to the previous year, taking them up to 14,586. This is similar to China’s second-hand EV sales, but it’s still a significant number. However, if new EVs are able to keep pace with existing ones, second-hand ones, too, will undoubtedly increase in value.
Electric Car Advantages
An electric car is able to save you a lot on gas. An electric car is a great investment in modern technology for many reasons.
No gas required
Your electricity provides all the power for electric cars. You don’t even need to buy gas again. Because fuel costs have increased dramatically, driving fuel-based vehicles can drain your wallet.
The best thing about an electric vehicle is that it is easy to charge, and you don’t need to run to a fuel station before you hit the road. A regular household socket could be used to charge your electric car.
These cars can be fuelled at extremely low prices. Many new cars will also offer great incentives to help you get money back from the government to go green. It is also good to save money on your own electric car.
Electric vehicles have green credentials, which are the biggest benefit. Electric cars can be 100 percent environmentally friendly because they are powered by electrical engines.
As it uses clean energy sources, it doesn’t emit any harmful gases or smoke into the environment. They are more efficient than hybrid cars, which emit gasses. You’ll contribute to a green and healthy climate.
The popularity of electric vehicles is growing. Wikipedia says that EVs are three times more efficient than cars powered by an internal combustion engine. Popularity brings new, unique types of cars to the market. This gives you a lot of options moving forward.
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Electric Cars’ Disadvantages
Although there has been a lot of evidence for the positives, there are some things that everyone should consider before they make an investment in an electric car. These are the main reasons.
Electric fuelling stations remain in development. There are not many places where you will find electric fuelling stations. If you travel a lot or visit relatives in rural or suburban areas, it might be difficult to find one. You might be stuck where your car is.
Steep is the Initial Investment
EVs are relatively new, and you might be surprised by the sticker price. Even the most affordable brands can run from $30,000 to $45,000
Luxury options may cost you $80,000 or more if you want them. Even though the technology is improving, the price of electric cars continues to fall. However, an EV can still cost $10,000- $50,000 more than a gas-powered car.
Electricity is not free.
You may also find that electric cars can cause problems with your energy bills if you aren’t careful enough. It is possible to make a bad investment if your research has not been done on the electric vehicle you wish to buy.
Speed and Driving Range Short
Range and speed are the limitations of electric cars. The range of most electric cars is between 50 and 100 miles. These cars need to be recharged. These cars aren’t suitable for long trips at the moment, but this is likely to change in the near future.
Longer Recharge Time
Although that only takes a few seconds to fuel a gasoline-powered vehicle, an electric car requires 4-6 hours or even longer to charge fully.
Because it takes so long to recharge these power stations, dedicated power stations are necessary. This means that planning and investment are not always possible.
You can get some charging kits that reduce the time. This will be an additional expense. Consider that as well.