COP26: Why battery raw materials are a highly-charged topic

Aggressive EV uptake is needed to meet a 2° C target, but metals supply will struggle to meet demand

Transportation accounts for 23% of global emissions, so it’s unsurprising that decarbonising the sector is one of the four key pillars of COP26. Dramatically accelerated electric vehicle (EV) uptake is needed to put the world on a 2° C trajectory. Yet there is a very big battery shaped barrier to rapid electrification.

This week’s COP26 briefing explores the tension between the unprecedented demand for battery raw materials that EV uptake will create and the reality of likely supply. Fill in the form to read the report, or read on for a quick overview.

EV sales must dramatically increase to hit climate targets

With costs falling, vehicle range improving and charging infrastructure growing, policy makers see passenger cars as an easy way to decarbonise. Battery electric vehicles (BEVs) and plug-in hybrids (PHEVs) are enjoying healthy growth, especially in China, Europe and North America; they are expected to account for 11% of global sales by 2025, rising to 23% by 2030. But a 2° C pathway will require EVs to account for three quarters of all sales by the end of the decade.

Battery supply is unlikely to keep up

So-called ‘giga-factories’, which produce the lithium-ion cells used in EVs at scale, are being rapidly rolled out. But even planned capacity is grossly insufficient to meet projected demand under our Accelerated Energy Transition -2 (AET-2) scenario, which models by sector the measures needed to achieve the 2° C target set out in the Paris Agreement. We estimate an additional 4,600 gigawatt hours would be needed by 2030, at a cost of $350 billion. But cost isn’t the only barrier — timescales are also a challenge. Giga-factories take around six years to build; add to that the lengthy product development and testing regime for cars, plus time to ramp up production, and being on track in 2030 looks unlikely.

Rising costs could derail uptake

Battery cost reduction has been a significant driver of EV uptake in recent years. But under an AET-2 scenario, unprecedented demand for lithium, cobalt and nickel could drive prices of these key raw materials to historical highs. Increased manufacturing costs would have to be passed on to consumers, which in turn could have a negative effect on demand.

Alternative strategies will be needed

Research is ongoing into both new technologies and new sources for raw materials. Alternative technologies such as lithium-sulphur batteries could help reduce base metal demand. Recycling end-of-life batteries could help reduce demand for primary raw materials. And the world’s oceans offer a plentiful potential supply of lithium, cobalt and manganese (although the technology for extraction is immature and the concept is widely opposed). But for these solutions to work, technology and supply chains would need to be built at scale. That brings us back to square one in terms of the lengthy development times for mines, smelters, refineries and factories.

Our report on the outlook for EVs and battery raw materials is the eleventh of a series of weekly briefings in the run up to the start of the conference on 1 November. Each report includes:

  • Key takeaways
  • Charts and tables
  • Where to find more information
  • How WoodMac can help your business with issues raised

Fill in the form at the top of the page to read the full report, or scroll down to see what to expect in future editions.

What’s coming up?

 20 October COP26 briefing: The corporate response

 27 October COP26 briefing: Economics of energy

 1-12 November COP26 in Glasgow