Even as the global electric vehicle (EV) market is on the cusp of an exponential growth in the wake of big push by governments across the canvass, the car-makers may encounter bumpy roads ahead, according a report.
The EV thrust must be read in the context of efforts by governments and city authorities to replace internal combustion engine vehicles (ICEVs) with cleaner alternatives.
``As car-makers gear up to electrify their fleets, they face challenges to secure supplies of raw materials used for battery production and to prove the environmental benefits of a life-cycle perspective,'' according to a report produced by independent research organization A.T. Kearney Energy Transition Institute.
“Electric car batteries rely on a host of rare materials - from lithium and nickel to cobalt. Battery makers around the world are struggling to secure supplies of these key ingredients as demand outstrips supply. This, undoubtedly, places pressure on car-makers. So, the hunt for alternative technologies is on,” said Romain Debarre, Managing Director, A.T. Kearney Energy Transition Institute, in a release.
“It is critical that India takes into account the practical aspects related to the EV roll-out, as it defines its long-term strategy for the sector. The problem is further complicated by the fact that we have limited availability of the natural resources required for LIB (lithium-in battery) battery manufacturing,'' said Abhishek Poddar, Partner, Energy & Process Industries, A.T Kearney India . Not surprisingly, in the latest automotive policy, the Centre had focused on overall pollution reduction through multiple technologies and regulations by implementing stiff targets, and by not demanding 100% switch to EV by 2030.
According to the report, cobalt is in particularly short supply globally and reserves could be depleted completely by the time 300 million EVs are produced - a modest proportion compared to the 1.2 billion cars on roads today. ``Since 2013, global lithium production has risen 7 per cent a year. We estimate miners need to accelerate production to more than 9 per cent a year to keep up with the demand,'' the report said. Rising demand and tight supplies had also led to price increases, it added. In 2015, prices in most markets rose by 40-6- per cent. In the same year, the price in China trebled, the report said.
“The challenging natural resource shortage is further exacerbated by a lack of viable and cost-effective reuse and recycling options for electric car batteries,” Mr. Romain added. “By 2025, the economics of recycling is likely to improve as used batteries become more commonplace and second-hand batteries take root,” the report said. ``Eventually, all batteries, including the re-furbished ones - must be recycled. This calls for robust regulations - in the form of strictly enforced anti-dumping and anti-pollution laws,'' the report added.
The report highlighted the need to look at the holistic life-cycle management of EVs to ensure that the desired reduction of CO2 footprint was achieved. ``This will require nations to consider which energy sources are used to charge electric car batteries.
``Governments, mining companies, battery producers and car-makers need strategies for an industrial and technological energy transition to reduce CO2 emissions, based on solutions that are practical, safe and economically viable,” the report said.
The report must be read in the context of proposals on the EV front by governments across the globe. France and the U.K. want all new cars sold by 2040 to ICVE-free. India is keen to achieve this goal by 2030. China has set a phased programme to reach 40% level by 2030. If one were to go by the indications of various governments, 30% of global cars will be BEVs (battery electric vehicles) or hybrid electric vehicles by 2040. ``At today's rate of production - 67 million cars of all types came of production line in 2016 - that would imply annual production in 2040 of 20 million EVs,'' said the report.
