Lowering the price of batteries will also mean lowering the price of electric cars, and that’s where the automakers are focusing.
The batteries they usually represent the 30% to 40% of the value of one electric vehicle. They are the most important cost and all the effort of car manufacturers lies in this direction. The reduction in the price of batteries will also mean the reduction in the price of electric cars, while battery technology is the one that will increase their autonomy, giving more mobility solutions.
Today, few sectors in the clean energy world are as dynamic as the electric vehicle (EV) sector. Now, public and private spending on electric cars has doubled compared to 2020. More and more countries have committed to phasing out internal combustion engines from 2035, setting ambitious goals for the path of electrification.
In 2021 China accounted for half of EV market growth, with a total of 3.3 million vehicles sold. Sales in Europe continued to grow strongly (up 65%) reaching 2.3 million units, while in the United States electrification saw an increase with 630,000 total sales.
China produces about 66% of all lithium-ion batteries worldwide and has the leading production for cathodes (70%) and with 85% for anodes. On the other hand, Europe is responsible for over 25% of global EV assembly, but has a very small share in the supply chain, apart from cobalt processing which is at 20%. The United States has an even smaller role in global EV production with only 10% of electric car production and 7% of battery production capacity. Korea and Japan have significant shares of the supply chain, emphasizing battery production and cathode and anode production techniques. Korea is responsible for 15% of global cathode material, while Japan accounts for 14% of cathode and 11% of anode material production.
Most minerals are mined in resource-rich countries such as Australia, Chile and the Democratic Republic of the Congo. But production will have to expand tenfold to meet the governments’ expectations for increased sales of electric cars. Rapid growth in EV sales during the pandemic has tested the resilience of battery supply chains, and Russia’s war in Ukraine has further exacerbated commodity prices (cobalt, lithium and nickel). In May 2022, lithium prices were seven times higher than the corresponding prices prevailing at the beginning of 2021. Meanwhile, Russia supplies 20% of the world’s high-purity nickel. Average battery prices fell 6% to $132 per kilowatt-hour in 2021. But if metal prices in 2022 remain as high as in the first quarter, battery packs will become 15% more expensive than they were in 2021.
Demand for EV batteries will increase from around 340 GWh today to over 3500 GWh by 2030. Battery components and supply will also need to increase. To do this requires additional investment and short-term plans, with the supply of some minerals, such as lithium, having to increase significantly by 2030. For example, demand for lithium is projected to increase sixfold to 500 kilotons by 2030, while there are similar increases for the other minerals as well.
Recycling can provide solutions to finding base metals. However, so far its contribution is small, while it is expected to become greater when there is better organization. There are still no organized battery recycling plants and the percentage of recycled metals is low. If there is no intense activity in this area, the search for minerals will face a big problem in the future.
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