Experts mull impact of global lithium shortage on EV rollout

23 Aug 2021 | Alexandra Chapman

A shortage of lithium – a key component of the widely used lithium-ion battery in electric vehicles (EVs) – could hamper the rollout of EVs required to decarbonise transport as countries around the world look towards net zero goals.

As the EV market grows, with Woodmac figures suggesting EVs will account for 56% of total vehicle sales worldwide by 2050, Norway-based Rystad Energy says demand projections for lithium-ion batteries are expected to reach 7.0TWh by 2030, which equates to approximately 4.67 million mt of lithium carbon equivalent (LCE).

“Bearing in mind production capacity of LCE in 2021 equates to around 0.64 million mt, there is clearly a substantial gap that needs to be met over the next decade,” senior vice president of energy metals at Rystad’s energy service research arm James Ley said.

Covid-19 saw a number of lithium projects under construction face delays, while low lithium prices and a subsequent lack of investors led to the delay of two projects in the world’s top lithium producing country Australia in 2019 and one in 2020 – the latter deemed by Fastmarkets Metal Bulletin Research to be the “catalyst for turning the bear market in lithium into a bull market.”

“Automotive companies as such are growing increasingly concerned with these constraints in lithium supply on the horizon and are making strategic decisions to invest upstream in in order to secure raw materials for their battery partners,” consultant at Rystad Jonathon Mulcahy said.

According to Fastmarkets Base Metals Research, the lithium market will remain generally tight, although supply is not expected to be a limiting factor in the long run, given a significant amount of new projects and expansions due to come online mid-decade.

“There is no shortage of lithium and no shortage of projects so it's all a question of timing – can the new projects be brought on in a timely manner?,” Fastmarkets head of battery raw materials research and base metals William Adams said.

With the fast tracking of the EV rollout by many automakers, including the likes of Tesla and Volkswagen, “the investment flood gates are opening,” according to Adams, who believes the market could be surprised as to how quickly new lithium supply comes online, “at least in terms of finance being made available.”

However, Adams remained cautious, warning that finance availability “doesn’t mean lithium projects will not face delays from environmental group action, Covid-induced labour shortages and restrictions and from the inherent difficulty in bringing on a big mining project."

In the meantime, the industry is looking to develop alternatives to lithium-ion batteries for use in EVs, with automakers Volkswagen, Toyota, General Motors, Hyundai, and Ford all having invested in solid-state battery (SSB) companies.

“There is always the potential for a shortage of lithium and it would be unwise to dismiss the possible impact,” transport policy manager at the Association for Renewable Energy and Clean Technology (REA) Jacob Roberts told EnergyCensus, adding “that is why industry and government are taking steps to mitigate those impacts through targeted research, investment and regulation.”

“We know that companies are already developing new battery chemistries that do not require lithium,” Roberts said, adding that even for lithium-based batteries, new chemistries are expected to increase energy density and longevity, potentially leading to more efficient use of the raw materials.

Last week, a consortium of seven UK firms including UK battery materials producer Johnson Matthey and the University of Oxford launched an initiative to develop solid-state batteries (SSBs), which EnergyCensus understands could feature in EV technology by the end of the decade.

If successful, SSBs could trump lithium-ion batteries, due to their ability to hold more charge for a given volume, but independent consultant at JouleVert Colin Matthews warns that while this new chemistry is promised, "it is not easy going from the lab to full production", not least due to higher costs associated with SSBs versus lithium-ion.

Battery electric vehicles (BEVs) are expected to account for a larger 9.5% of total new car registrations in 2021 according to the Society of Motor Manufacturers and Traders (SMMT) - a upward trend which, in the UK will continue with the government’s plan to ban diesel cars and vans by 2035 and 2040, respectively.