Frankfurt, Germany
Major carmakers like Volkswagen, Daimler and Stellantis have been racing to secure battery cell supplies in Europe, but may face a bigger challenge finding enough battery raw materials as they plan to manufacture electric vehicles.
Failure to obtain adequate supplies of lithium, nickel, manganese or cobalt could slow the shift to electric vehicles (EVs), make those vehicles more expensive and threaten carmakers' profit margins.
Forecasts from banks like UBS that EV sales would soar over the coming decade forced a rethink of battery production. This was followed by EU funding programmes worth billions and major battery plant announcements by car manufacturers and suppliers. Volkswagen alone plans six battery plants in Europe, while Daimler will build four with partners.
IT InnoEnergy now lists almost 50 planned projects in the EU. If all those plans become reality, local production should meet demand around 2030. About 640 gigawatt hours (GWh) would be available, enough for average annual production of 13 million cars.
The problem lies with raw materials like lithium, nickel, manganese and cobalt. Market experts from Benchmark Mineral Intelligence (BMI) speak of "the great raw material disconnect" - high investments in cell factories, but missing investments in raw material extraction.
Within a year, the price for lithium carbonate has more than doubled, explains Caspar Rawles, head of price and data analysis at BMI. In the case of cobalt, the largest deposits are located in Democratic Republic of the Congo but extracted under miserable working conditions, and increase in price is also expected. Some carmakers, including Volkswagen, are trying to secure the supply of raw materials with exclusive supply contracts.
The solution may be investments in raw material extraction in Europe - lithium is particularly available. Startup Vulcan Energy is working on obtaining lithium CO2-neutrally from thermal water in Germany's Upper Rhine plain and has already signed up Renault as a customer. Recycling is another option. But here, too, Europe lags far behind China.
Source: ET Auto.com
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