The coming decade is expected to witness massive growth in sales of battery-electric vehicles (BEVs). While the automotive market may not transition away from internal combustion engines as fast as predicted by advocates of BEVs, the automotive industry appears optimistic about the future of electric vehicles—a mood underscored by Toyota announcing recently that it was doubling its forecast for its 2030 BEV sales and investing $35 billion in production capacity to accomplish that goal. WSJ Logistics Report Editor Paul Page heralded the announcement as a bellwether, noting that Toyota had “been the last voice of caution about electric vehicles among the world’s top auto makers.”
But even if consumer demand for BEVs lives up to the hopes of Toyota, Ford, GM, Stellantis and other automakers designing new BEVs—and the pure-play BEV makers like Tesla, Rivian, and Lucid—there’s a major obstacle hanging over the production side of the emerging BEV industry: risky supply chains for critical minerals needed in lithium-ion batteries and electric motors.
As covered in last week’s blog, China’s dominance of supply chains for cobalt—an essential component in lithium-ion battery chemistries—is a growing geopolitical concern for leaders from both parties. The Democratic Republic of Congo (DRC), which supplies most of China’s and the world’s cobalt raw materials, is also the focus of intense scrutiny over child labor in cobalt mining, according to the Wilson Center.
Apple, Microsoft, Tesla, and other companies whose products contain cobalt have been sued by International Rights Advocates for “aiding and abetting the cruel and brutal use of young children [in DRC] to mine cobalt.” The controversy has led Tesla and others to use blockchain technology to ensure (and prove to human rights groups) that they use only ethically sourced cobalt.
But the market forecasts for BEVs—and for batteries like those in Tesla’s PowerWall that will be needed to store intermittent solar and wind power—portend a vast increase in demand for not just cobalt but other critical minerals, including copper, nickel, lithium, graphite, manganese, and rare earth elements (REE). The International Energy Agency recently estimated that demand for such minerals will grow ten times by 2040 in a baseline scenario based on current government policies—and by 30 times in a scenario with more aggressive policies.
As is the case for semiconductors, new sources of critical minerals cannot be rapidly developed given the geologic distribution of mineral resources, the capital investment required for new mines and processing facilities, and the challenge of managing the environmental impacts of mining and processing. In fact, according to IEA’s research, the average time to move a new mine from exploration to production in recent history is 16 years.
There are new investments underway—many of them underwritten by the automotive industry. GM, for example, has partnered with MP Materials to supply REE from the company’s Mountain Pass rare earth mine in California. And Tesla, Toyota, and Ford have invested in capacity to build their own batteries in-house.
Much more such investments will be needed, and not just in the U.S. As reported by Automotive News, the Center for Critical Minerals Strategy urges development of both “domestic mining and processing capabilities and working with allies to source materials from elsewhere and put pressure on other countries to clean up their practices.”
“We want to work with our allies to try to create [ethical sourcing trade agreements] and to commit to sourcing [critical minerals] that adhere to high standards,” said Center Director Abigail Wulf. “And we want to use traceability frameworks, whether it’s blockchain or something else, to prove that things actually do adhere to these standards throughout the entire supply chain.”
In addition to faster technology innovation—especially to reduce cobalt content in batteries—and scaling up materials recycling, the IEA recommends a similar approach: enhancing supply chain resilience and market transparency.
