EV Battery Raw Material Shortages To Limit EV Market Growth? (Germany’s Largest Auto Association Warns Of It, + BNEF’s Response)

A possible electric vehicle battery raw material shortage could limit the planned growth of the sector over the coming years, an exec at Germany’s largest auto industry association, BDI, has been quoted as saying.

The warning from BDI’s head of security and raw materials, Matthias Wachter, posits that demand for electric vehicles is growing faster than production capacity and thus that raw material bottlenecks may emerge relatively soon owing to resource market realities.

Tesla Model S battery components. Image via Visual Capitalist and Red Cloud Klondike Strike

“The risk of running into bottlenecks in raw material supply is increasing because demand is growing faster than production capacity,” Wachter was quoted as saying by the newspaper Welt am Sonntag.

“Without sufficient supplies for instance of cobalt, graphite, lithium, or manganese there won’t be any future technology ‘made in Germany’,” he continued.

Which makes for an interesting comment, as it sounds as though Wachter is implying that whatever limited resources are available they will be monopolized by firms located elsewhere in the world. Whether or not that’s actually the case remains to be seen of course.

In the face of these statements, CleanTechnica reached out to the head energy storage analyst at Bloomberg New Energy Finance (BNEF), Logan Goldie-Scot, for his perspective on the matter. Here were his comments:

“Funnily enough I am currently in Shanghai speaking about this very topic. It’s clear that rapidly increasing battery demand is putting pressure on the lithium-ion supply chain. Despite mining companies gearing up production, based on current expected production there may be shortfalls in supply leading up to 2030. However, in areas where production capacity will not be sufficient, it is more likely that market price signals will galvanize large and small miners to open new mines and facilities. For lithium in particular though, contracts are typically done on a bilateral basis between companies so some could miss out if they underestimate demand or are unable to agree an offtake agreement.”

Back to the coverage noted above, Reuters provides more: “Demand for these materials is expected to soar as carmakers rush to embrace EVs in response to governments around the world cracking down on pollution. German carmaker Volkswagen said it is pushing to secure long-term supply contracts to avoid material shortages as it aims to invest €34 billion ($41 billion) in battery-powered cars by 2022 to challenge Tesla.” (Read more about that Volkswagen push here. However, while Tesla may have stimulated it and may threaten Volkswagen to an extent, we’re of the impression that Volkswagen simply understands the future is electric and is now aiming to use its transition caused by the diesel emissions cheating scandal to get ahead of the competition — which is all automakers.)

Back to the Reuters coverage: “Daimler’s Mercedes brand plans to offer an electric version of every model it sells by 2022, while rival BMW, a pioneer in electric cars with its i3 model, has vowed to achieve mass production by 2025 with 12 fully electric models.”

In relation to all of this, it should also be realized that a number of large firms around the world have begun to explore the possibility of large-scale electric vehicle battery recycling. Much of the important material in electric vehicle (EV) batteries can be economically recycled, even now. As materials costs rise, these sorts of operations will become even more economically viable.

Worth noting is that Tesla’s plans involving the Gigafactory in Nevada (and presumably others elsewhere as well) include the large-scale recycling of old Tesla EV battery packs and home + commercial energy storage systems.