Global electric vehicle sales more than doubled in 2021, from 3.1 million dollars in 2020 to 6.7 million dollars the following year. This has sparked billion-dollar investments into building battery factories all across the world. Building these batteries requires a reliable supply of raw materials that can be hard to get given the difficulties involved in obtaining permissions to create new mines which can also take a number of years. But that won’t stop demand. Experts expect the global demand to surge 15-fold by the year 2030–from 350 gigawatts to 2,000 gigawatts–which will surely stretch the supply chain.
Much of this surge is due to energy requirement changes worldwide, with demand projections in line with the 1.6 degree global warming scenario. Supply issues circulate around components, with lithium-ion batteries dominating this decade and sodium-ion batteries significantly emerging in approximately ten years. Passenger vehicles are expected to drive demand early on with stationary storage becoming a dominant contributing factor by 2030. Because of the more prominent role these energy sources will play as the world shifts away from fossil fuels, there will be a major increase in the need for electricity to be stored as renewable output fluctuates. Repurposed EV batteries have become a viable option that also addresses waste and recycling streams. For example, used EV batteries are highly suitable for the storage of excess solar energy. This allows businesses and other entities to rely on solar energy banks for withdrawing energy whenever it makes sense.
An increase in battery demand will go hand-in-hand with the rapid transition of energy sources but that means global supply will require a commensurate investment in battery technology innovation. Gigafactories are being constructed to meet the growth as supply in 2030 is projected to meet only sixty percent of the expected demand, especially when light to medium-heavy commercial vehicles come to market, contributing about 1 terrawatt to that demand. Aviation and shipping will also generate an increase which could further impact projections. As a result, international partnerships are beginning to develop, specifically in the automobile market. Major car manufacturers are brokering deals with foreign raw material and components companies to ensure unbroken supply chains. The recent supply chain shortages of semiconductors has taught industry valuable lessons that few will be eager to relearn. These close collaborations also direct the battery makers towards creating the kinds of EV batteries that the automakers will need for the cars they’re planning to produce.
As a result, battery makers will have power in terms of dictating how much they want to provide to a particular manufacturer. They will want to avoid connecting themselves to a supply cycle that requires putting too much faith in a car manufacturer’s projections of demand and investing too much in honoring their partnership. Because there could be restrictions on selling excess supply to other manufacturers who may require different kinds of components, they could find themselves sitting on expensive unsold quantities of materials. Such EV battery partnerships require a great deal of foresight and stability in the demand to keep them healthy over long periods of time.
Looking ahead, one can also speculate about how comfortable consumers will be about owning a used EV. Similar to how personal mobile devices have evolved in terms of batteries, the units are so integrated with their power sources that a bad battery means the phone is no longer usable. With EV batteries often costing in the tens-of-thousands, will the same be true for cars? Many questions and uncertainty continue to exist around the EV battery market but one thing is for sure: we’ll need answers sooner than later.
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