The NMA Foundation presents The Car of the Future weekly feature:
Many challenges remain in the adoption of electric vehicles (EVs)—battery range, charging infrastructure, charging time, and the consumer price of the vehicle. Crucial metals production should perhaps top the list since the challenges are as unique as the metal needed.
A number of automakers are bullish on EVs. Tesla hopes to sell 500,000 cars in 2020 and in September, the world’s largest automaker Volkswagen (VW) announced they plan to offer an electric version of all 300 models by 2030. Also, at least 7 countries, have pledged to go electric in the next 20 to 30 years. This includes two of the world’s largest auto markets, China and India.
The high price of batteries is the biggest reason that countries have been handing tax incentive subsidies to EV buyers. The current U.S. Tax plan (not yet passed) will no longer allow a tax incentive subsidy and Norway, the world’s largest EV adopter is also tinkering with their subsidy formula. This could indeed tamper with EV sales projections.
The optimistic projections of an electric car revolution are based on gradually declining battery prices. Unfortunately though, due to the scarcity of some important metals and their concentrations in politically unstable areas of the world, the EV revolutionary zeal could dash hopes.
For example, global demand for cobalt has never been higher. The most expensive mineral used in EVs, Cobalt costs around $60,000 US dollars per metric ton. The spot price shot up by 83 percent this year and some 60 percent of mined cobalt is used to make batteries which is used in the cathodes to achieve the energy density that helps improve driving range.
Bloomberg Intelligence predicts that the current projected growth in EV sales will drive up the demand for the hard, gray metal and could rise 9,300 percent by 2040. At current production levels, cobalt reserves are expected to last another 57 years.
Roger Bell, director of mining research at Hannam & Parters in London said recently that he believes that the amount of cobalt needed in the next eight to 15 years could easily double. He added, “Even in the most conservative assumptions, you’re looking at maybe a 20 percent gap between supply and demand for cobalt by 2025.”
The world’s biggest supplier of cobalt, the Democratic Republic of Congo (DRC) sources half of the world’s supply. The instability of the country’s government makes automakers nervous and cobalt all the more valuable driving up the price.
A large share of the mineral comes from “artisanal” mines dug by local laborers under the control of various strongmen. Exploitation and child labor are rife according to Amnesty International. The rest is dug by Chinese state companies. The DRC uses its share of the profits to pay off loans issued by China.
Volkswagen recently failed to lock in a five year price point for cobalt in the DRC because apparently the company low-balled the bid according to some experts. According to the Financial Times, VW’s DRC bid included a request to supply 80,000 to 130,000 tons of cobalt per year. Currently, total supply of the world’s Cobalt is just over 100,000 tons per year. In order to meet the expected demand, companies and countries will have to work more closely together.
The silvery-white alkali metal which is used as a powder, Lithium is one of the most crucial elements for EV’s Lithium-ion batteries. The lightest of all metals, lithium is highly reactive and flammable. Only found in a compound and due to its solubility, Lithium is commonly obtained from brines.
Most of the world’s Lithium production is in South America, where Lithium is extracted from underground brine pools and concentrated by solar evaporation. Each evaporation batch takes from 18 to 24 months. Lithium is also present in sea water, but commercially viable methods of extraction have yet to be developed.
The reason Lithium is an important component has to do with its low atomic mass and a high-charge-and-power-to-weight ratio. Lithium-ion batteries are rechargeable and have a high energy density (regular lithium batteries are disposable).
In March 2016, Tesla founder Elon Musk said that in order to produce half a million cars in a year, the company would need to absorb the entire world’s Lithium-ion production. Goldman Sachs Industrials and Materials head, Bob Koort called Lithium the “new gasoline.”
Lithium deposits are still being discovered. Chile currently holds half of the known deposits in the world and investments are quickly being made in newly discovered deposits in the western United States and elsewhere. Deutsche Bank estimates that there 185 years’ worth of reserves in the ground. The biggest problem with Lithium—can production ramp up fast enough to meet the growing demand?
In next week’s post, I will discuss the challenges with Magnesium, Nickel, Palladium and a possible breakthrough with a Zinc battery.
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