The EV industry is booming like never before. With EV popularity up by 144% in 2019 and EV technology taking the 2020 Consumer Electronics Show (CES) by storm, the market is only set to grow this year. However, with such rapid market growth, is the supply chain equipped to keep up with demand?
Lithium is a rare metal element currently crucial for EV batteries. Found in low concentrations in granite rock and brine, the sourcing of lithium requires mining. It was reported last year that China was the third leading country in lithium production, coming only behind Australia and Chile. Estimated at producing nearly two-thirds of the world’s lithium-ion batteries, and controlling the majority of the world’s lithium processing facilities, China is clearly instrumental within the EV supply chain. Indeed, 22% of global lithium reserves are thought to be within China.
A recent scientific journal report has highlighted weaknesses in the Chinese lithium market. With the possibility that geopolitical or natural disasters could disturb lithium supply, researches have raised the question whether China is equipped to meet the high external demand needed for development of the EV industry. The paper posed the questions:
‘Does the lithium supply chain have coping ability under the demand impact of new EVs and the risk of supply interruption?’
‘Can improvement measures improve the coping ability of the lithium supply chain?’
The study uses resilience analysis to estimate short and long-term risks to fluctuations in lithium supply and demand. Resilience can be defined as ‘the ability of a system to tolerate interruption while maintaining its structure and function’. In short, how strong is the Chinese market when affected by change?
Whether the balance between lithium price, supply and demand can be maintained is instrumental in predicting resilience.
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The researches found that under the impact of high demand for EV batteries, the lithium supply chain faces a long-term supply shortage. They found the supply chain is poorly equipped to cope with ‘demand shocks’, such as rapidly increasing global production of EVs.
Although the report’s model went on to show how demand and supply would fluctuate over the next ten years, leading to periods of inadequate supply to overcapacity, it is expected by 2030 that the industry will once again be in short supply.
In fact, if a short-term lithium supply interruption should occur in 2020, there will be little impact on Chinese output on lithium for EV batteries. This is because lithium is currently being mined at a rate that exceeds production rate. In other words, China have some lithium stockpiled. On the other hand, if long-term interruptions occur then the system is predicted to fare less well.
So how can the lithium supply chain be strengthened?
The scientists have pegged the recycling of lithium batteries as a key method to cope with increasing demand for new EVs. Although currently there is no widely conducted way of doing this, technological innovation is building momentum on the subject.
One example of innovative lithium battery recycling has been recently reported within the scientific community. It involves using spent batteries as a cobalt source to prepare ‘hollow CO3O4 microspheres’ that can be used in the preparation of high-performance supercapacitor electrodes. Such supercapacitors can be then used in new EVs; the Nawa Technologies recently announced their first e-bike that uses an ‘ultracapacitor’.
Certainly, the widespread recycling of EV batteries is something of the future, but not unreachable. With demand for EVs skyrocketing, scientists are fervently working to solidify all parts of the supply chain with sustainable innovation.