- Why has demand for EV batteries increased?
- Where are current supply chains geographically focused?
- How does recycling factor into critical mineral supply chains?
- What are the risks to battery mineral supply chain disruption?
- What are the key challenges the industry faces?
EV Battery Production Will Depend on the Critical Minerals Supply Chain
The shift to transportation electrification is driven by existing and future decarbonization requirements, particularly for light duty automobiles, and has resulted in automakers setting ambitious production goals. The result is an enormous increase in advanced battery cell production to support millions of plug-in EVs (PEVs), which will require a corresponding increase in raw material sourcing, particularly for lithium, nickel, and cobalt. The current supply chains for mining and refining these minerals are heavily focused in specific geographic areas, with China having an outsized share of nearly every market. Businesses and governments alike desire to increase production of these materials concurrent with efforts to increase the overall supply to diversify their sourcing and reduce the risk of disruption.
While these new sources for critical minerals are being established, disruptions in supply, including shortages, could delay progress toward widespread electrification and the related benefits in reducing global greenhouse gas emissions. To make this transition successfully, stakeholders must build new, more localized supply chains, establish a circular ecosystem through recycling to reduce dependence on mining, and innovate ways to reduce the reliance on some of these materials.
This Guidehouse Insights Strategy Insight reviews the current demand and market drivers for EV batteries that are leading to increased demand for battery minerals. It explains the motivations for diversifying the battery material supply chain and the potential negative consequences of supply chain disruption. It also offers key recommendations for avoiding near-term shortages and establishing long-term sustainability in the battery material supply chain.
- Automotive OEMs and Tier 1 suppliers
- Automotive lithium-ion battery manufacturers
- Government and regulatory agencies
- Investor communities
- Mineral mining and refining companies
EVs Have Driven Increases in the Need for Critical Minerals
Current Supply Chains Are Concentrated Geographically
More EVs Mean More, and Bigger, Batteries
Building Supply Chains Takes Time
Recycling Will Take Years to Scale
Critical Mineral Shortages Could Short-Circuit EV Adoption
Battery Plants Might Not Scale in Time
Chinese Automakers Could Topple Legacy Automakers
Transportation Decarbonization Efforts Could Falter
The Auto Industry Must Build a Resilient, Circular Battery Supply Chain
Establish Robust Recycling Ecosystems
Continue Providing Incentives for Localized Supply Chains
Promote Alternative Battery Chemistries
Ensure Robust Charging Networks
- LD BEV Advanced Battery Manufacturing by Region, World Markets: 2023-2032