I’ve spoken to half a dozen or so EV battery mineral experts in the past several months with one prime objective: understanding how much battery mineral supply can ramp up by 2030 and what that means for potential market share of electric vehicles in the overall auto market. Naturally, my top hope would be getting someone to tell me, “Oh, yeah, we could reach 100% EV market share in 2030.” Or even 70% or so. Unfortunately, that’s just not the reality of the battery supply chain according to everyone I’ve talked to.
This is not a problem of the Earth’s fundamental raw material supply, as I think every big fan of electric vehicles knows. However, the market’s capacity to actually extract and process EV battery minerals is a limiting factor for growth in this timeframe, and even Elon Musk has acknowledged this.
There is a bit of a critical assumption here that goes beyond the EV or battery market, though. EV market share will depend on how big the overall auto market is as well as how big the EV market is. Many EV market share forecasts for 2030 assume an overall auto market of about 100 million units. Naturally, while 50 million EVs would be 50% of a 100 million vehicle market, if demand for non-EVs collapsed (for some reason) and the overall auto market ended up being 50 million units in size, 50 million EVs would be 100% of the market. So, this broader question of what the market beyond EVs will be is critical for coming up with an EV market share forecast (i.e., guess).
BloombergNEF expects 26% plugin vehicle market share in 2030 in a market that doesn’t quite get to 100 million vehicles a year — hitting about 25 million plugin vehicle sales a year by then. (Recall that Tesla alone is targeting production of 20 million vehicles a year by then, and Volkswagen is aiming to produce about 5 million. Volvo plans to be 100% electric by then.) For much more on BloombergNEF’s perspective, listen to my interview with Logan Goldie-Scot, Head of Clean Power Research at BloombergNEF.
In a similar vein, in a recent interview with Josh Goldman, cofounder and CFO/CTO at KoBold Metals, Goldman told me that he saw 30–40% market share (of a 105–110 million vehicle a year market) as the upper limit, and sees 30% as a much more realistic but still ambitious expectation. That would be about 30–44 million plugin vehicles a year, and even the lower end will be very difficult to achieve from a base mineral perspective, according to Goldman.
Notably, both of those forecasts include plugin hybrids, which I’ll come back to in a moment.
Here’s a lithium company exec — Jonathan Evans, Director, CEO, & President of Lithium Americas Corp (which I own some shares of) — saying it’s going to be really hard for the industry to get to 30% EVs by 2030 and talking at length about the market (saying many of the same things the others said in the interviews above):
That basically lines up precisely with BloombergNEF’s forecast.
In an interview I conducted with Caspar Rawles, Head of Price Assessments at Benchmark Mineral Intelligence, Rawles noted that Tesla’s lithium target for 2030 is equal to the pipeline for the rest of the world combined. If you assume Tesla does hit its target of producing 20 million vehicles a year by 2030, and you assume batteries in EVs in the rest of the market are approximately the same capacity on average as Tesla’s, then you’re looking at an EV market of 40 million units per year. Again, that’s with Tesla reaching 20 million vehicles a year, which none of these experts seem super confident is possible, and the rest of the market combined also reaching 20 million vehicles a year. That 40 million total is basically the upper portion of Josh Goldman’s forecast (which he didn’t seem to really think was likely/practical, and which also included plugin hybrids). It’s well above BloombergNEF’s forecast of 25 million.
As I noted at the top, a forecaster’s assumption for the overall auto market is critical to any projection for EV market share. If fossil fuel vehicle sales do collapse in the face of growing electric vehicle competitiveness, adoption, and awareness, that could potentially bring down the overall auto market if EV production capacity isn’t high enough to match demand. If robotaxis become the norm, that could also bring down auto market volumes (vehicles would drive many more miles a year on average), but it would also throw other wrenches into the equation — larger batteries may be more important.
Naturally, though, if EV battery mineral supplies get crunched, that will drive up their prices, which will drive up EV battery prices and, thus, EV prices.
Plugin Hybrids — Do They Help?
Many EV fans are not plugin hybrid vehicle (PHEV) fans. And I get it — I’m one of those people. Plugin hybrids come with various issues — not enough electric range to cover all trips, more maintenance and potential long-term costs from more complicated powertrains that still use internal combustion engines and related components, and worse performance, for example. Even worse, some people buy PHEVs and then don’t charge them!
However, plugin hybrids also come with some benefits, especially if used as intended. Most notably, most people drive very little most days of the year and that driving can be covered with a relatively small PHEV battery, like a 30 kWh or 40 kWh battery. Used appropriately, 90% or more of a PHEV’s miles/kilometers would be driven using electricity, not gas or diesel. the other side of the powertrain offers the security or buffer needed for the car to be practical, but seldom has to be used. (I had a BMW i3 with ~70 miles of electric range and a gas-powered range extender for 9 months and I spent approximately $5 on gas in that whole time.) If people can use PHEVs like this and avoid buying electric cars with 80 kWh or 100 kWh batteries in them, that allows for far more plugin vehicles to hit the market if you assume that a limiting factor for sales is battery supply — and it’s an especially big help if insufficient battery supply is the greatest limiting factor in this market.
Let’s use an extreme example just to emphasize this further: Image someone’s got a full electric vehicle with 160 kWh of battery in it but drives like a normal, average American or European. They might just have to charge once every two or three weeks. If that battery was split into 4 batteries and used as 40 kWh batteries in PHEVs, those PHEVs could probably handle 100% of the owner’s driving needs on electricity. That’s 4 cars instead of 1 doing average weekly driving on electricity. That’s 4 times more driving on electricity and 4 times more carbon-reduction or pollution-reduction benefit.
Like I said, PHEVs have issues. However, so does limited battery supplies.
But Why Are There Battery Mineral Supply Limits?
Why are battery supplies limited if the raw materials exist on Earth and you and I can see where the market is headed? Well, it’s a problem with market dynamics. All of the people interviewed above explain the issue. Pick any of those interviews or all of them to get slight variations on the explanation. Or, simply put, the fundamental problem is that it takes many years to plan and develop a new mine or extraction project (whether for lithium or nickel), but no one in the market seems intent on providing miners with funding for battery minerals 7+ years out, or even 5+ years out. Miners can’t invest in many new mines without the funding to do so, and they can’t get a new mine up and running in a year or two. Automakers and cell producers don’t want to lock themselves into mineral purchase contracts at the levels needed to get these mines kickstarted. So, there’s a production pipeline rolling that will lead to much more growth in the electric vehicle market, but nothing close to the growth that would get the market to 100% electric vehicle sales in 2030 at 50 million or more vehicles a year, let alone 100 million vehicles a year.
I’ve got much more to come on this, including interviews not yet published. Stay tuned. However, without some surprising and inspirational news, don’t expect the story to change.
Oh yeah, as hinted above, even Elon Musk doesn’t seem to see anywhere close to 100% EV market share by 2030. In a recent interview with Sandy Munro, he said that the market would “probably” be “majority EV” in 10 years. That implies that we will probably have passed 50% EV market share by 2031. And that’s basically the upper limit that I included in my headline at the top of this article.
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