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MPI Analysis

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Metal mining constraints on the electric mobility horizon

2018 |James Eddy |Chris Mulligan | Jasper van de Staaij |Diederik Klip | Nicolò Campagnol | Toralf Hagenbruch

The rapid uptake of EVs will see the emergence of a new supply chain connecting previously unrelated industries. Mining, battery manufacturing, and automotive will become increasingly interwoven. Each industry has its unique characteristics, be it geopolitical risk, technical complexity, or policy risk, creating intra-sectoral uncertainty through interdependencies.

Between now and 2030, this emerging supply chain is expected to produce over 340 million electric vehicles (from passenger cars to trucks and buses)1. The implications of the shift toward electric vehicles will be enormous for the global automotive supply chain and their raw material requirements. At present, the global value of lithium, cobalt, and nickel for batteries is estimated at USD~5 billion, of which cobalt represents the largest share (~60%), followed by lithium (~30%), and high purity class 1 nickel suitable for batteries (~10%). At current market prices, the combined value of these commodities to meet battery demand is expected to reach USD46 billion by 2025 and USD134 billion by 2030.

Our analysis of raw material requirements for batteries, which includes a radical shift away from cobalt- to more nickel-intensive batteries, shows that with expected metal supply developments, EV adoption is likely to be challenged by availability of cobalt and class 1 nickel around 2025.

However, multiple factors are at play that could potentially shift the balance either way. Market players will need to understand the impact of key uncertainties. Will material scarcities hamper the roll-out of EVs? Can the mining sector ramp up production fast enough? Will the adoption of new battery technologies alleviate potential supply shortfalls? How will other demand segments for cobalt, class 1 nickel, and lithium be affected?

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