Wednesday, July 6

The automobile industry is clear about its commitment to the electric car. The lithium industry… not so much

The European Union is clear: we must bet on the electric car. Manufacturers are clear: there is no other choice but to bet on the electric car. Lithium producers… are no longer so clear. The availability of the ore is scarce and we want to run before we start walking.

all to one. After years in which the European Union has gradually lowered the maximum emission limits allowed for vehicles, community policies have set themselves the goal of imposing the electric car above any other technology. The path is marked by its own policies.

In 2035 it will not be possible to sell vehicles powered by combustion engines. And first, Euro 7 has to come into force, a new European emission regulation that wants to lower the maximum limits so much that, in practice, it will prevent the massive sale of combustion cars. In Europe it will be necessary to sell cars with extensive electrification if the expected requirements are to be met, which even includes regulating the dust ejected by car brakes.

Shortage. Of manufactured vehicles, components and lithium. The automobile market is experiencing an almost unprecedented situation that has not been seen since the introduction of mass production: demand exceeds supply. The repeated confinements that have occurred in the last two years, the component crisis and the Ukraine War have led to a scenario in which it is estimated that by 2030 25 million units will no longer be manufactured.

And microchips or wiring harnesses have focused attention, but experts have long been warning of a lithium shortage that is expected to last over time. A problem that is increasing the price of raw materials, of vehicles and that puts at risk a reduction in the price of what, it is hoped, will be the technology of the future.

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There is, there is. The problem is that there are not enough farms to supply so many electric cars. Until solid-state batteries can catch on, electric car batteries will continue to require lithium as a key component in their manufacture. And although this mineral is very abundant on earth, it is not exploited enough.

In fact, the price of lithium has risen so much (with growth of up to 531% in China) that brands have set out to mine it themselves and manufacture their own batteries to reduce intermediaries and production times. There is lithium, but the demand and the context of recent years have caught manufacturers off guard.

Too much time. And there is no short-term solution. “There is a lot of lithium underground, but the problem is timely investment. Tesla can build a gigafactory in about two years, cathode plants can be built in less time, but it can take up to 10 years to build a greenfield lithium brine project,” says Joe Lowry, founder of advisory firm Global Lithium. , to Bloomberg.

The efforts of the suppliers are focusing on finding new lithium deposits and opening new mines, but the mineral has come to focus the interest of the States, since it is already considered a strategic material. The complications for its exploitation are increasing, with strict temporary borders for the future and protests from the towns near the mines. In addition, in the case of opening a new exploitation it takes years to function at full capacity.

The transition to the electric car has a huge problem in the short term: this graph

default scarcity. With suppliers struggling to exploit and authorities across a continent pushing for electric car adoption in the near future, Wood Mackenzie estimates that by 2031 demand for LFP cathode chemicals will reach around 3.1 million tonnes. in 2035. It is 13 times more than that required in 2021.

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the usual. The most affected will, once again, be those with the fewest resources. Difficult to produce as many vehicles as they once did, automakers are choosing to prioritize larger, larger-priced cars. Brands are posting record profits and the idea that it is better to sell less and more expensive seems to be taking root. Even eliminating part of its offer along the way and reducing the available ranges.

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