As electric vehicle makers face meteoric demand fueled by mandates, incentives and environmental factors, the overriding concern for years to come will be how to mine enough minerals and metals needed for EV batteries.
Accessible supplies of lithium, cobalt and nickel among other commodities do not match the expected number of batteries required for projected electric vehicle production worldwide.
One industry insider, Lewis Black, CEO of Almonty Industries, one of the leading global suppliers of tungsten, recently laid out some market realities for an episode of the Charged Fleet Off Peak video series. Almonty runs mining operations in Spain, Portugal, and South Korea.
Tungsten is a conductive metal that has long been used to create rivets for automobiles and aircraft, and now with the advent of viable electric vehicles of all types, it mixes in with the materials for electric vehicle battery anodes and cathodes and the interior wiring of the vehicle. Because it can bear intense heat, tungsten enables an EV to rapidly charge.
State of EV Battery Components
About 90% of the world's tungsten is produced either by Russia or China, with China predominant, Black said.
Tungsten in the U.S. was more valuable than gold in the 1950s and 60s, but the tungsten rush in the U.S. and Western democracies eventually depleted supplies and it’s now considered a declining resource, he said.
Many other EV battery supplies and materials come from China and Russia, nations with which the U.S. has strained relations, Black said.
“We’re very fortunate,” he said. “We only operate in democracies with the last man standing. So, we’re reopening the world’s largest tungsten mine in South Korea.”
While cobalt mostly comes from China, lithium and nickel exist in places around the world, he added.
Drawbacks of Lithium-Ion Batteries
Lithium will remain the basis of any battery technologies going forward because it is an essential ingredient that does its job well, Black said.
“The key seems to be how can you push more nickel into these lithium-ion batteries? Because more nickel means longer charges, which means you've got more range. The issue has always been cobalt. Cobalt has always been the problem. Because it’s a carcinogen, it’s a particularly unpleasant metal. It's combustible. When this thing catches fire, it can burn for 48 hours. There's nothing you can do about it. So I think the development is going to be more in the replacement of cobalt than lithium or nickel.”
Alternative Electric Vehicle Battery Types
Black believes that solid-state batteries will ultimately replace lithium-ion ones, but not anytime soon. Once the transition is ready, it will resemble the move from the Blackberry to the iPhone, and it could evolve quickly, he said.
“The consumer is demanding a product generally that brings the smartest guys in the room into the equation. They know what the consumer wants and ultimately, we will get that. But what form it'll be in is still unknown.”
Global Supplies of Key Electric Vehicle Battery Minerals
Media reports have repeatedly asserted the world lacks enough accessible global supplies of the crucial metals needed to create batteries for mass electrification.
Projected comparisons of future supply volume versus the number of EV batteries show serious gaps.
“They're quite right,” Black said of such media reports. “There really is about a 10-year lag to what governments would like to do and what can be done.” The mandates of having to buy an EV by a certain year carries risk for governments because generally in democracies, “we don't like to be told what to do,” Black said.
Black pointed out that EV sales have slowed significantly in Europe. “Everybody wants a hybrid, first because they've had a harsh winter in northern Europe, and they found the cars did not break. And secondly, because they're being told by 2030, 2035, there's no more availability of any other car.
And people are thinking, “I don’t like a mandate,” Black added.
The fact is “we don't have enough critical metals. It's going to take at least a decade to get some equilibrium in the market. But the other factor is, will we need as many of these critical metals?
"Because I think the demand for EVs is losing some of its luster because people are being forced to go down that road.”
Future Costs of Battery Minerals
Essential minerals and metals should be considered luxury items, Black said, given anticipated supply and demand.
“You have more demand and supply prices are going to remain stubbornly high. Economies of scale are what you look at. It took Henry Ford to come up with the idea of a production line to bring the cost of vehicles down. Before then, vehicles were a luxury item. This is identical. Ultimately, you need economies of scale to bring the prices down of EVs. But when you are facing a fundamental shortage of raw materials, you're going to exacerbate these costs for some time.”
Cost Outlook for Electric Vehicles
That adds up to more volatility for electric vehicle prices, Black said, as evidenced by Tesla’s six price cuts and counting since last year.
In the last 12 months, competition in the electric vehicle market has soared, prompting Tesla to cut prices to protect its market share and remain dominant, he said. “I'm not sure that Tesla has cut prices because it's become cheaper for them to produce the vehicles.”
Every car manufacturer has an EV program, and Tesla will have to fight hard to maintain its market share, Black said.
Ensuring Human Rights Standards
With so many OEMs and suppliers trying to line up enough supply of metals and key ingredients, concerns are growing about global human rights standards in some of the nations where the minerals are mined. That means EV manufacturers and battery suppliers are under pressure to ensure they comply or at least follow some of the basic standards.
“This is a very difficult situation because not everyone plays on a level field. So, if your competitor is willing to look the other way in acquiring the product that you need to be able to produce, you find yourself at a competitive disadvantage. I think now suppliers are looking at it. They would like to see greater transparency in their supply chain, and greater compliance with ESG (environmental, social, and corporate governance). But given that currently there's no real choice, they're kind of caught in a sort of a moral conundrum. What do you do?”
Black said the challenge is not an easy one to deal with. “You are going to have to in some ways overlook some of the frailty of the transparency of your supply chain to remain in business until such time that governments or industry has come up with a plausible and realistic way of addressing more transparency in the supply chain, which means more diversity in supply.”
For Almonty Industries, their focus is on developing the tungsten mine in South Korea. The nation is the largest consumer of tungsten per capita in the world, supplying both batteries and semiconductors as well as hard metals and defense equipment, Black said.
“I think we're in a very good location. One of our mandates has always been we only will operate in democracies because we like to sleep at night, and we demand transparency.”
Can Fleet Managers Be Confident in Lower Battery Costs?
As the push for fleet electrification grows, fleet managers need to be sure the electric vehicle manufacturers can rely on a steady supply of low-cost batteries while their operations can count on enough timely vehicle deliveries. Those factors weigh heavily in choosing the right time to acquire electric fleet vehicles.
About three-fourths of all EV batteries are produced in China, but the main challenge now is the supply of semiconductors, Black said.
“In terms of forward costs, batteries will come down as there will be greater economies of scale. As you produce more, you get more efficient, more organized. You get leaner. The problem will be if consumers start to back away from this product, because then you're in a situation where you could have a fringe product rather than a mainstream one. And if you go back 10 years, if we spoke about any kind of environmental car, a hybrid was the center of the universe. An electric vehicle was a golf buggy.”
Now, the market appears to be pushing aside hybrid vehicles in favor of electric vehicles, he said. “But what we're seeing in Europe will for sure transition over to here to the U.S. People don't like being told that from a certain date they can no longer choose what they want.”