In today’s world, the idea of ’going green’ or being greener has morphed from a mere buzzword to a significant geopolitical issue. For example, a typical passenger vehicle in the US emits around 4.6 metric tons of carbon dioxide per year, and that’s just one vehicle! Climate scientists and environmental experts have been strategizing how to alleviate these numbers for decades, but ultimately it’s up to specific industries to advocate for change and enact more sustainable policies.
One of the industries that tops this list is the automotive industry, and although the move to electric vehicles (EV) has begun, is it a realistic solution? Are there enough raw materials available, such as lithium, to facilitate that transition? And finally, what does the future of electric vehicles look like?
the The importance of Llithium for electric vehicless
Although EVs have been around for about the same amount of time as internal combustion engine vehicles (ICEVs), there is a key difference in their propulsion methods: ICEVs use the combustion of fossil fuels to generate power, while EVs They use stored energy from lithium ions. batteries
The average lithium-ion battery system requires approximately 8kg of lithium carbonate, highlighting that lithium is not only a core component of electric vehicles, but significant amounts will be required if the shift to electric vehicles is to happen in the near future. our life. In fact, the International Energy Agency (IEA) predicts that we could face a lithium shortage as early as 2025.
With 30 national governments committing to work to phase out ICEVs by 2040 at the COP26 climate talks in 2021, the push to secure the use of lithium in electric vehicles is becoming increasingly noticeable around the world.
The Sprint to protect lithium stores
For some countries, this means the race is on to secure lithium for electric vehicle batteries. For example, Nio Inc., a Chinese company that specializes in making high-performance electric vehicles, agreed to invest in a lithium mining project in Argentina through a new deal with Australia’s Greenwing Resources Ltd in late September. .
The transaction will see Nio pay $12 million for a 12.16% stake in the deal, and experts note that this strategic move mirrors what other rivals have done recently, such as Tesla and General Motors.
However, Nio, Tesla and General Motors are not the only electric vehicle manufacturers going directly to the source of lithium supply. Mercedes-Benz recently announced a new deal with Canadian mining company Rock Tech Lithium for 10,000 tonnes/year of battery-grade lithium. This deal is yet another example of automakers moving quickly to secure their future position in the auto industry through the acquisition of lithium for electric vehicles.
Ultimately, skyrocketing lithium prices have been hurting the stability of manufacturers’ supply chain and their bottom line, leading these auto companies to go to the source for raw materials rather than their usual suppliers. .
Long-term sourcing challenges
Beyond this race to obtain raw materials for the creation of batteries, what are other lithium supply challenges facing the industry?
Well, materials scientists face two main obstacles. One is to reduce expensive, scarce or problematic metals used to create lithium-ion batteries due to their negative socio-environmental impact. Essentially, this is an effort at efficiency. They are working to figure out how to use fewer materials to achieve the same results.
The second challenge is to improve battery recycling so that valuable materials from spent car batteries can be reused. Considering that the IEA anticipates lithium shortages in the next five years, these methods could be integral to bringing the world to its goal of net zero.
Lithium sourcing strategies
In the past 18 months, lithium prices have soared more than 500% amid supply chain bottlenecks and strong demand for electric vehicles, so we’re seeing automakers go directly to the source. However, lithium batteries are still 30 times cheaper than when they first entered the market in the early 1990s, showing how products have become more accessible and affordable over time.
So the question is, is going to the source the most effective solution for lithium procurement? For one, manufacturers would have access to the raw materials they need to create the batteries that power their electric vehicles. However, on the other hand, by cutting out suppliers, they must now employ workers to process the lithium compound into a usable product. Not to mention, when manufacturers bypass suppliers, they no longer have access to the expertise of their materials scientists or innovative thought leaders.
At Infinity Stone Ventures, we believe that lithium explorers like us are crucial to securing the electric vehicle supply chain. We are also involved in the development of other critical metals needed for lithium-ion batteries beyond lithium, including graphite, copper, cobalt, nickel and magnesium. It is estimated that 30 new lithium mines will need to come into production over the next 10 years to meet projected demand. That is why we are not only engaged in developing battery metal projects to drive the green revolution, but our mission is to provide the most innovative and industry-specific solutions to our customers in various industries.
Going forward, if we ever hope to reach our goal of net zero, lithium will only become more critical to the advancement of electric vehicles. The solution to eliminate the manufacture of new ICEVs and replace them with EVs in our lifetime is an idealistic one; however, realistically, materials scientists will need to continue to forge more innovations to keep the supply chain running smoothly.
These current supply chain disruptions, coupled with rising lithium prices, have prompted several auto companies to seek direct sourcing of their own materials. Although this strategic move may make the process more straightforward, it will arguably not make lithium mining, processing, and manufacturing any easier.
With pressure from government agencies to make the switch to electric vehicles sustainable by 2040, lithium production and the electric vehicle market as a whole is expected to see explosive growth in the coming years as it cements its position as the a fundamental material in the modern era.
Zayn Kalyan is a contributor to Grit Daily News and the CEO and director of Infinity Stone Ventures Corp. He began his career as a software engineer as employee number 4 at a fintech company that provides risk solutions to financial institutions. After the sale of that company, he joined Altus and moved into venture financing. With the market shift to commodities and a renewed focus on ESG companies, he began to realize the critical importance of mineral exploration and its place as the foundation of the economy and growth.