Has the increase in sales slowed in full swing by a lithium shortage?

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Electric vehicle sales soar globally

6.6 million electric vehicles were sold worldwide in 2021, half of them in China. Therefore, sales doubled in one year and now represent 10% of new car sales.

Things have accelerated since the beginning of 2022, with two million units sold in the first quarter (+75% in one year).

Strong support for public policies around the world

Performances that can be explained in particular by the strong support of politicians around the world, the amounts, to say the least, of public subsidies that partly explain the enthusiasm for this new type of motorization. Let’s not dream: not all consumers have become staunch environmentalists overnight.

Thus, purchase aid doubled in 2021 to reach almost 30 billion euros worldwide.

Multiplication of the manufacturers’ offer

It should also be noted that the catalog of EVs offered by the various manufacturers is expanding day by day. This makes the offer more attractive.

Manufacturers thus multiplied the number of vehicles available by five between 2015 and 2021. Around 450 electric models are now available on the market.

Tensions on raw materials

However, tensions over raw materials are expected to slow this increase in sales. “Governments, industry and investors must remain vigilant and creative to avoid supply problems for essential minerals,” IEA Executive Director Fatih Birol said in a statement.

These minerals are mainly mined in countries such as Australia, Chile or the Democratic Republic of Congo.

But a worrying situation to say the least: China produces 75% of lithium-ion batteries – the dominant technology – and controls more than half of the processing and refining capabilities of lithium, cobalt and graphite.

Lithium needs critical, IEA warns

Lithium needs are particularly critical, according to the IEA. According to their calculations, they must be multiplied by six by 2030, to reach 500 kilotons. This would require commissioning 50 new mining sites.

Europe and the US control very few raw materials

Although Europe produces 25% of the world’s electric cars on its territory, it controls very few raw materials. This is also the case in the United States.

“The European and American governments have made strong commitments to develop battery production capacities, but most of the supply chain must remain Chinese until 2030”, underlines the IEA.

Alternative battery technologies, recycling, but also incentives to buy smaller cars can help save these minerals.

The sales boom can be slowed down

In the short term, sales could also be harmed by the increase in the price of raw materials used in batteries, as well as by logistical problems linked to the war in Ukraine and the confinements linked to Covid-19 in China.

AIE takes over portfolios

The IEA recommends increasing taxes on thermal vehicles and gradually reducing subsidies for the purchase of electric vehicles. The agency also recommends extending these programs to trucks and buses, but also to developing countries, and supporting them through the development of charging networks.

Our opinion, by leblogauto.com

Since late 2020 and throughout 2021, the price of lithium has been steadily increasing. Main reason for this outbreak: the amount extracted is proving to be insufficient to supply the production of batteries for electric vehicles (EV).

The main component of an electric car battery is lithium, and its degree of use largely explains its price (it is estimated that about 40% of the cost of the battery depends on this raw material).

In October 2021, based on data extracted from consultancy Benchmark Mineral Intelligence, Bloomberg estimated that this increase in lithium prices was not a result of the boom in electric car sales itself, but rather linked to the fact that its extraction did not increase. in the same proportion as the production of batteries for electric cars.

However, the fall in the average price of lithium observed in 2018 led to a slowdown in investments and the creation of new projects dedicated to its extraction, which caused an escalation in the price.

Sources: IEA, AFP

sum up

While electric vehicle sales soared globally in 2021, that momentum could be constrained by significant shortages of essential materials for the production of their batteries.
This is, in fact, what follows from the conclusions of the annual report of the International Energy Agency (IEA) on the electrification of the car fleet.
What is particularly concerned about the supply of lithium available in the coming months.
Another problem, and no less important: if Europe produces 25% of the electric cars sold in the world on its territory, it controls very few raw materials.
It should also be noted that China produces 75% of lithium-ion batteries – the dominant technology – and controls more than half of the processing and refining capacities of lithium, cobalt and graphite.

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