Main issues with Electric Vehicle batteries

Mobility is undergoing a profound transformation. 

It’s now broadly recognized that the energy transformation required to limit global warming to 2 degrees Celsius must include the complete decarbonization of mobility. Achieving this requires a massive shift away from vehicles with internal combustion engines powered by gasoline and diesel, to zero emission electric vehicles.

Electrification of Mobility Is Complex and Needs Diverse Solutions

Battery Precious Metals Have Serious Supply Chain Risks

• future supply and demand dynamics of battery precious metals

• supply chain ownership considerations

• sourcing strategies

• pricing volatility

• future battery technology (chemistry) evolution

• ethical sourcing considerations

• carbon intensity

• risk management 

There are two primary forms of vehicle electrification: battery electric and fuel cell electric.

 Both forms are needed to achieve the desired energy transformation for mobility. They are complementary: they use the same electric powertrain, best serve different use cases, and can be paired in hybrid architectures.

Notwithstanding the complementary technical advantages and market use cases for battery electric and fuel cell electric powertrains, there is an ongoing debate about the relative merits of these two powertrain technologies. 

And despite heightened political and social pressures on the decarbonization of mobility, the debate has been surprisingly superficial, particularly given the complexity and significance of the issues.

The production of current leading batteries for electric vehicles uses certain rare earth metals, which I often refer to as “battery precious metals”. These include lithium, nickel, manganese, and cobalt. There are concerns regarding the future of the raw material supply of these metals. 

We must consider potential future constraints on battery production given supply chain risks. We must also consider the strong nexus between limited availability of battery precious materials and resultant pricing increases and volatility on battery production costs. 

There are also other consequential issues related to macro global political and economic power, shifting industry profit pools, ethical sourcing, and carbon intensity. 

All players across the industry value chain—including automotive OEMs, powertrain suppliers, battery manufacturers, mining companies, financial investors, and governments—must fully understand the complexities of this rapidly-changing market. 

This is a challenging task, even for sophisticated, well-researched and well-capitalized organizations. Indeed, a credible risk assessment must be grounded in a sound understanding of: 

Industry participants must ensure their long-term strategies are resilient in the face of many dynamic uncertainties.While there is much to unpack here, I’d like to dive specifically into the topic of the serious supply chain risks related to cobalt.