The electric vehicle industry officially debuted after Tesla launched its first electric vehicle in 2008 - the Tesla Roadster
Since the battle for global market dominance has ensued, the stakes are getting tougher and tougher as automakers fight for market share and resources. The transition to electric vehicles is quite complicated. Initially, it looked like a collective global effort to fight climate change. However, as the industry progresses, it begins to look like a power play between global industry leaders and the Chinese government.
The green transition may have been the best solution to prevent pollution in cities and reduce the use of fossil fuels in decline. However, the raw materials needed to develop electric vehicles are increasingly scarce.
During the global pandemic, automakers suffered the brunt of global chip shortages, leading to supply chain problems. A few years after the pandemic, industry insiders warn that there could be another shortage of lithium – a raw material used to develop electric car batteries.
Threatened by crippling shortages, carmakers are rushing to lock up their supplies of “white gold” in politically and environmentally fraught competition from China, Nevada and Chile.
Ideally, an automotive manufacturer would contract a vendor to procure the raw materials needed to produce its vehicles, including copper. But the tides are turning after General Motors and BYD’s Chinese parent company did something unusual and went straight to the source, getting stakes in lithium miners.
Another crisis?
Other car manufacturers are making sure by investing in lithium refining or companies that recycle lithium from used batteries.
With the electric vehicle production deadline looming, a shortage of lithium supplies would be crippling for carmakers who need to increase sales by tens of millions of cars each year. In January, General Motors announced plans to make a $650 capital investment with lithium.
To achieve its ambitious electric vehicle production goals for 2023 and beyond, the US automaker will set up four battery production plants (in partnership with LG) and invest in North America’s largest lithium mining company.
Volkswagen and Honda are also working to reduce their need for freshly mined lithium by forming recycling companies. In March, Honda signed an agreement with US battery recycling specialist Ascend Elements to ensure a steady supply of recycled lithium-ion batteries for its US electric fleet.
Even if global lithium production is set to triple in the next decade, growth in sales and demand for electric vehicles (up 55% in 2022) threatens to outstrip production.
In addition, the uncertainty of the precious mineral emerges as another conflict in the strained US-China relations, AP News reported.
Other lithium-producing countries, including Chile, Indonesia and Zimbabwe, are maximising the profitability of the industry’s precious mineral deposits by requiring miners to invest in refining and processing before they can export.
