Major carmakers like Volkswagen,
Daimler and Stellantis have been racing to secure battery cell supplies in
Europe, but may face a bigger challenge finding enough battery raw
materials as they plan to manufacture electric
Failure to obtain adequate supplies of lithium, nickel,
manganese or cobalt could slow the shift to electric
make those vehicles more expensive and threaten carmakers' profit margins.
Forecasts from banks like
UBS that EV sales would soar over the coming decade forced a rethink of battery
production. This was followed by EU funding
programmes worth billions and major battery plant announcements by car
manufacturers and suppliers. Volkswagen alone plans six battery plants in
Europe, while Daimler will build four with partners.
IT InnoEnergy now lists
almost 50 planned projects in the EU. If all those plans become reality, local
production should meet demand around 2030. About 640 gigawatt hours (GWh) would
be available, enough for average annual production of 13 million cars.
The problem lies with raw
materials like lithium, nickel, manganese and cobalt. Market experts from Benchmark
Mineral Intelligence (BMI) speak of "the great raw material
disconnect" - high investments in cell factories, but missing investments
in raw material extraction.
Within a year, the price for
lithium carbonate has more than doubled, explains Caspar Rawles, head of price
and data analysis at BMI. In the case of cobalt, the largest deposits are located in Democratic
Republic of the Congo but extracted under miserable working conditions, and increase
in price is also expected. Some carmakers, including Volkswagen, are trying to secure the supply of
raw materials with exclusive supply contracts.
The solution may be
investments in raw material extraction in Europe - lithium is particularly
available. Startup Vulcan Energy
is working on obtaining lithium CO2-neutrally from thermal water in Germany's
Upper Rhine plain and has already signed up Renault as a customer. Recycling is another option. But here, too, Europe
lags far behind China.