Battery raw materials and electric vehicles

Pulling the handbrake on the electric vehicle revolution?

"With big model releases and announcements more akin to the tech world, it’s very easy to get caught up in the EV hype. Undoubtedly, electrification is happening and many of the barriers are starting to fade away. It’s important the industry remembers, however, that EV penetration can only be as fast as new mines can be brought online." Milan Thakore, research analyst, quoted in the Financial Times commodities note

Key takeaways: battery raw materials and EVs

  • Global auto manufacturers have outlined electric vehicle plans to 2050.
  • Achieving EV penetration rates of over 10% by 2030 with the current battery technologies presents a challenge.
  • The pace of change in the battery raw materials sector could dictate the speed of the EV revolution.  


1 minute read

There is no doubt that the electric vehicle (EV) revolution is underway. Every top global auto manufacturer has outlined EV plans to 2050. And government targets to ban the internal combustion engine are becoming more aggressive. Can current battery technology support this growing demand? And more importantly, will supply challenges with battery raw materials including nickel, cobalt and lithium act as a handbrake on the EV revolution?

After all the hype, automakers, battery manufacturers and governments now have the challenge of delivering on EV targets. Taking an integrated view across the supply chain, it’s clear to us there are significant challenges ahead.

Double digit growth for battery raw materials

We forecast double digit growth for battery raw materials for the next decade, with the main driver being the push for EVs. This demand growth will put increasing pressure on the raw material supply chain.

Where are the supply challenges?

Supply side challenges for battery raw materials and development of batteries may put the brakes on the EV revolution – our analysis suggests there is not enough 'stuff' to go around.

Demand for lithium remains strong and base case capacity is set to ramp up in the longer term. However, the supply picture for nickel and cobalt is far more challenging.

The economics of cobalt

Cobalt’s unique characteristics mean it is uneconomical to mine on its own and it is mined mainly as a by-product of other metals – primarily copper and nickel. As the cobalt market tightens in the long term, the inability of mined cobalt to respond to increasing demand will be a huge challenge.

Its overwhelming reliance on supply from the Democratic Republic of the Congo (DRC) is only going to increase over the coming years, as it is home to all the largest cobalt-bearing projects under consideration. And geopolitical risks in the DRC are only on the up.

Our base case view has cobalt demand essentially doubling by as soon as 2025 although we believe that the cobalt market will slip into surplus for the next few years.

Nickel miners needed

Nickel’s long-term fundamentals were already looking tight before the current enthusiasm for electric vehicles. Nickel has seen several years of low prices and under-investment. New demand from EVs and energy storage creates a widening supply gap through the 2020s – and there seems to be little appetite for new investment in nickel projects.

How do we solve the supply gap conundrum?

What needs to happen to prevent raw material supply challenges from pausing the EV revolution?

The key will be more investment – new mines need to come on stream – and advances in technology to introduce new battery chemistries will need to be made.

Work is ongoing to drive improvements in energy density however changes in the industry take time and can be hard to predict.

One thing is for certain - the battery raw materials sector will continue to evolve. The pace of change in the sector could dictate the speed of the EV revolution.  

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Our latest battery raw materials analysis shows rapidly increasing deficits in the lithium, nickel and cobalt markets post 2030. We now take a look at battery recycling and how the industry needs to develop to support growing demand for the key metals. An overview of some of the major challenges and barriers highlight that while recycling will be critical for any significant EV penetration, it still may not be enough.

Can electric vehicle battery recycling fill the gap?

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