Battery Demand to Increase, Outpace Supply, Panelists Say
The demand for batteries will dramatically increase over the next several years, eventually outpacing supply, panelists said during a July 26 Center for Strategic and International Studies webinar.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
The demand is driven by a "very robust" demand for electric vehicles, said Jessica Roberts of Bloomberg's Benchmark Mineral Intelligence. Current electric vehicle usage and projected usage are dominated by Europe and China, with projections showing that 40% of all vehicles sold will be electric by 2025, said Kwasi Ampofo of Bloomberg NEF. The current fleet of electric vehicles is projected to triple in the next three years, he said.
In order to fill this demand, battery production will increase from 500,000 gigawatt hours to over 5 million by 2023, and the annual amount of raw materials for global battery production will increase from just over 2 million metric tons to 18 million over the same period. Battery chemistry is also changing due to supply and cost issues. Lithium iron phosphate (LFP) has been gaining market share over nickel, manganese and cobalt (NMC) because the materials are more abundant and less expensive and Chinese control of 90% of the battery-grade manganese.
China's is "overwhelmingly dominant in each state of battery production, except possibly mining," Roberts said. What China does not have in its own resources, it has aggressively pursued raw materials agreements on, such as for Indonesian nickel and Congolese cobalt. Europe and the U.S. have begun creating their own supply lines, but, according to Roberts, it takes varying amounts of time to build out battery supply steps, which makes it difficult to coordinate investment in a supply chain. It can take up to 25 years to open a mine, while less than two years for a cell processing facility.
Even with the projected $42 billion in investment, after 2030 there will be a "rapidly growing gap between supply and demand" that is not covered by currently announced projects, Roberts said. What we are likely to see, she said, is a market bifurcated between Chinese-controlled supply chains and everyone else.