Do we have enough batteries?

By 2035, 50% of all new car sales in China will need to be deemed “new energy vehicles” – either fully electric or hybrid. Roughly 12M new cars in China will have some form of lithium based battery powering them. These regulations are not specific to China – the European Commission suggests that 30M electric vehicles (EVs) need to be on European roads by 2030 to meet EU emission reduction targets (roughly 10% of the total EU cars on the road). Conservatively, globally, 30-40% of all new cars produced could be electric by 2030 (i.e. 20-30M EVs based on 2019 annual production of 70M cars).

Around 70,000 tonnes of lithium was produced in 2020. Each electric car uses 10kg of lithium for the batteries. Under current production rates, that’s enough lithium for 7M electric vehicles, a far cry from the 20-30M needed by 2030. While lithium is not going to run out any time soon (known reserves ~80M tonnes), the ability to quickly scale up production will be a rate limiting factor. To achieve 20-30M EVs per year by 2030, lithium production will need to scale by 3-4x today’s amount by the end of the decade. If demand for EV’s explode, the amount of lithium required will be much higher.

In reality, lithium batteries are not just used in EVs. They are used to support a range of other portable and stationary applications including commercial drones, electric bikes and power grids. While demand for EVs is booming, other sectors are also electrifying at a rapid pace. The big elephant in the room is the renewable energy sector. In 2020, roughly 166 GWh energy was produced using renewable sources. This is expected to significantly increase (i.e. 3-4x) as countries look to de-carbonise their power systems. While some of this can be supported by pumped hydro and mechanical storage systems, these will be limited by geographic constraints. With lithium technology being sucked by EVs, analysts forecast a supply gap of 225 GWh of available storage to support renewable projects by 2030.

All of this boils down to – how do we effectively supply enough energy storage to meet future demand? With supply constraints on lithium in the short term and booming demand across EVs, renewables and other applications, how can we provide enough storage in time to meet our emissions obligations? To support this, investment is required to commercialise new battery technologies and increase supply of storage technologies. The answer is simple - we need to think beyond lithium. Let’s think aluminium.

Source: European Automobile Manufacturers Association; China New Energy Vehicle Industry Development Plan – 2021-2035; US Geological Survey; Barrons – “Why Lithium Could Be a New Risk for Tesla and Other Electric-Vehicle Makers (2020); International Renewable Energy Agency – Global Renewables Outlook 2020; The rechargeable battery market 2018 – 2030 – Avicenne Energy (2019); International Hydropower agency (2020);

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