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| Fig. 1: Salar de Olaroz Lithium Brine Mine, Argentina. (Source: Wikimedia Commons) |
Despite lithium's plentiful supply, a demand crunch like no other in its history has made this element a key material for battery manufacturers going forward. As carbon reduction efforts increase, automobile manufacturers are turning their attention to electric vehicles (EVs). These EVs use lithium, as well as cobalt and nickel, to build batteries to replace existing internal combustion engines in new makes and models. [1]
Although demand for lithium has increased year-over-year, many automobile manufacturers have recently pledged to convert all makes and models to electric by 2030. [2] Along with increasing demand for wearables and portable consumer electronics, which also require lithium- ion batteries, lithium suppliers are experiencing unprecedented demand for the compound.
Over the next decade, lithium mining efforts will continue to increase, but risk for a supply shortage remains high. The impacts of these shortages could have profound implications on the supply chains for consumer electronics and automobiles, all while inhibiting transitions to cleaner energy sources.
Typically, lithium is found in underground deposits. Australia, Chile, South America, and the United States are currently the largest commercial suppliers of lithium. These deposits are either mined directly or pumped to the surface using water. In the latter method, the brine mix is left to evaporated until only the lithium remains. An example of this chemical-filled basin is pictured in Fig. 1. Both of these strategies have environmental costs as well. The former requires thousands of acres of land to mine and can disrupt nearby plant and animal life. The latter requires large amounts of water, often requiring the diversion of nearby water sources. [3]
Once mined, these materials go to manufacturers for production. Lithium batteries make up most of all lithium production. These batteries can be found in phones, wearable devices, and most importantly as of recent, electric vehicles.
Demand for each of these categories have increased in recent years, and researchers estimate global chemical supply of lithium will equal ~400,000 tons 2021, up from ~270,000 tons just three years prior in 2018. [1] This comes as EV sales are estimated to take a greater share of total vehicles sold. A review of electric vehicle sales in the US estimated that over 300,000 EVs were sold in the US in 2020, a rise from just under ~120,000 in 2015. [4]
This exponential rise is driven largely by EV production and pledges from manufacturers to sell only electric vehicles by 2030. Among these manufacturers are Bentley, BMW, Ford, General Motors, and Honda, making up a huge piece of the global automobile supply. [2] This increase comes in tandem with diminishing adoption costs for consumers as EVs grow more affordable and more public charging infrastructure becomes available, such as the charging ports pictured in Fig. 2.
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| Fig. 2: Various Volkswagon, Chevy, and BMW electric vehicles at a charging port in Stockholm, Sweden. (Source: Wikimedia Commons) |
This supply risk comes with heavy consequences for automakers. These manufacturers are reliant on lithium batteries to effectively transition their fleet and align with climate-focused pledges they have made to phase out internal-combustion engines.
Indications of these shortages are already present. Despite massive growth in manufactured supply of lithium in recent years, analysts predict that demand will increase 4.5x to 2,000,000 tons from 2020 to 2030. Lithium pricing per ton has also increased as of late, rising from ~$6000 per ton in Q4 2020 to ~$12,000 per ton in Q2 2021. If long term investment in the extraction of lithium does not increase, these shortages and price hikes could continue later into the decade. [1]
These price increases have downstream effects on consumers and climate activists. Producers will pass some of these increased material costs onto consumers by raising the prices of their product, whether consumer electronic devices or electric vehicle. If this continues for a longer period, it could severely diminish the cost-effectiveness and affordability of green energy and therefore the feasibility of climate activist efforts to transition consumers to these alternative energy sources.
© Collin Douglas. The author warrants that the work is the author's own and that Stanford University provided no input other than typesetting and referencing guidelines. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.
[1] P. Desai and M. Nguyen, "Shortages Flagged for EV Materials Lithium and Cobalt," Reuters, 1 Jul 21.
[2] T. Krisher and A. Madhani, "US Automakers Pledge Huge Increase in Electric Vehicles," Associated Press, 5 Aug 21.
[3] D. B. Agusdinata et al., "Socio-Environmental Impacts of Lithium Mineral Extraction: Towards a Research Agenda," Environ. Res. Lett. 13, 123001 (2018).
[4] D. Gohlke and Y. Zhou, "Assessment of Light-Duty Plug-In Electric Vehicles in the United States, 2010-2020," Argonne National Laboratory, ANL/ESD-21/2, June 2021.
