EV batteries: the next major shortage?

Even though global car sales decreased in 2020 and 2021, EV (electric vehicle) sales increased. The EV market’s massive growth will lead to supply chain challenges for the various components that make up EVs, especially the batteries. Thomas J. Madison Jr., transportation/infrastructure consultant, sums it up with this sentiment, “the transition to EVs simply cannot succeed, economically or otherwise, without a robust, reliable supply chain of the batteries required to power these electric vehicles, and the minerals and metals necessary to produce them.”

What’s unique about the EV supply chain?

While the supply chain of traditional ICE (internal combustion engines) tends to be more complex mechanically, requiring numerous parts, the technology required for EVs is what makes them more difficult to manufacture at scale. Batteries represent nearly half of the total value of EVs, making them the most critical piece. In terms of the raw materials needed to produce the small and powerful lithium-ion batteries found in EVs, carbon (graphite), cobalt, nickel, and lithium are essential.

Graphite Supply Constraints

In China, battery and EV producers share concerns about the constricted supply of graphite, which is used for the anode of lithium-ion batteries. Nearly 70% of this material is sourced in China. The rise in demand for graphite is intensified by the rapid growth of the battery market. So much so that a significant deficit is predicted in 2022, while 2021 saw a surplus. Exacerbating the situation is the fact that graphite mines in China tend to shut down during the coldest months, forcing the producers to fulfill orders from their available inventory.

Lithium Shortage

One main metal of the batteries used in EVs and other technology, lithium is already highly sought after. However, the global supply is dwindling and prices are surging from the strong demand. While Australia is the largest global supplier of lithium, producing it from hard rock mines, Argentina, Chile, and China also mine it from brine or salt lakes.

While EV battery shortages aren’t the only challenge facing the industry, there are solutions to succeed in the market amidst rising demand. Converge’s experienced EV team can customize a strategy to optimize your supply chain. Contact us today.


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