The electric vehicle supply chain comprises the mining and refining of raw materials and the manufacturing processes that produce lithium ion batteries and other components for electric vehicles. The lithium-ion battery supply chain is a major component of the overall EV supply chain, and the battery accounts for 30–40% of the value of the vehicle. ^[1] Lithium, cobalt, graphite, nickel, and manganese are all critical minerals that are necessary for electric vehicle batteries. ^[2] There is rapidly growing demand for these materials because of growth in the electric vehicle market, which is driven largely by the proposed transition to renewable energy. Securing the supply chain for these materials is a major world economic issue. ^[3] Recycling and advancement in battery technology are proposed strategies to reduce demand for raw materials. Supply chain issues could create bottlenecks, increase costs of EVs and slow their uptake. ^{[1] [4]}

The battery supply chain faces many challenges. Deposits of critical minerals are concentrated in a small number of countries, mostly in the Global South. Mining these deposits presents dangers to nearby communities because of weak regulation, corruption, and environmental degradation. These communities face human rights violations, environmental justice issues, problems with child labour, and potentially generational legacies of contamination from mining activities. Manufacture of battery technology is largely dominated by China. However burning less petroleum products in vehicles can reduce the environmental impact of the petroleum industry because, as of 2023 ^[update], most petroleum is used in vehicles. ^[5]

Background

International commitments reflected in the Paris Agreement have led to efforts toward a renewable energy transition as a strategy for climate change mitigation. Green capitalism and sustainable development approaches have informed policy in many countries of the Global North, resulting in rapid growth of the electric vehicle industry, and resulting demands for raw materials. ^[6]

Description

The battery supply chain includes:

Upstream activities include mining for required raw materials, which include critical materials such as cobalt, lithium, nickel, manganese, and graphite as well as other required minerals such as copper. ^{[2] [7]}

Midstream activities include refining and smelting of raw mineral ores with heat or chemical treatment to achieve the high-purity materials required for batteries, ^{[2] [1]} as well as the manufacture of cathodes and anodes for battery cells. ^[7]

Downstream activities include manufacturing of the batteries and end goods for the consumer. ^[2]

End of life activities include recycling or recovery of materials when possible. ^[2]

China dominates the electric car industry, accounting for three-quarters of global lithium-ion battery production. Most refining of lithium, cobalt, and graphite takes place in China. Japan and Korea host significant midstream cell manufacturing and downstream supply chain activities. Europe and the United States have a relatively small share of the supply chain. ^[1]

Upstream activities (mining and processing) largely take place in countries with extractivist economies such as Australia, Chile, and the Democratic Republic of the Congo. ^{[1] [6]}

Recycling of battery minerals is limited, but is expected to rise in the 2030s when there are more spent batteries. Increasing recycling would bring considerable social and environmental benefits. ^[8]

Growth

Mainstream projections for electric vehicle uptake assume that there will be more cars in the future. ^[9]

In 2021, 3.3 million EVs were sold in China, up 400% from 2019 and higher than the global sales in 2020. ^[1]

Other components

EVs have fewer parts than ICEs. On average, a motor for an electric car has about 20 moving parts, but a comparable ICE would have 200 or more. ^[4]

Some electric vehicles motors are permanent magnet motors that require rare-earth elements such as neodymium and dysprosium. Production of these materials is also dominated by China and poses environmental problems. An alternative motor is the AC induction motor, which does not use these minerals but requires additional copper. ^[4]

Electric vehicles require more semiconductors than internal combustion engines (ICEs). Taiwan is the world's largest producer of semiconductors. ^[4]

Challenges

Supply chain risks include sustainability challenges, ^[10] political instability and corruption in countries with mineral deposits, ^[11] and human rights or environmental justice concerns. ^{[12] [2]} The supply of critical minerals is concentrated in a few countries: for example, the Democratic Republic of the Congo produced 74% of the world's cobalt in 2022. ^[13] Extreme weather events, geopolitical issues, international trade regulation, consolidation of supply chain companies into a few large corporations, and rapidly changing technologies all present additional challenges to building a resilient supply chain. ^[2]

Ethical supply chains must address concerns about child labour, corruption, and environmental degradation. ^[11] Mining for critical minerals can threaten public health or human rights in communities affected by mining. ^[2] Child labour and lack of safety regulations frequently endanger mine workers. The environmental effects of mining these materials can pollute or deplete soil and water; and the effects can last for centuries. Human rights violations frequently go undetected. ^[2] Monitoring these issues is challenging, because battery minerals typically travel 80,000 kilometres (50,000 mi) from where they are extracted to downstream manufacturing facilities. ^[2]

Mineral extraction in the Global South for manufacturing of batteries and vehicles consumed in the Global North may replicate historical patterns of injustice and colonialism. ^[6]

However electric vehicles are better for the environment than fossil-fuelled vehicles. ^{[14] [15]} The supply chain for fossil-fuelled vehicles is mostly petroleum (for a typical car around 17 tonnes of gasoline ^[16]), and can be complicated and obscure. ^[17] Burning less petroleum products in vehicles such as two-wheelers ^[18] can reduce the environmental impact of the petroleum industry because, as of 2023 ^[update], most petroleum is used in vehicles. ^[5]

Critical Minerals

Cobalt, nickel and lithium have been identified as critical minerals, that impose resource availability limits on large-scale adoption of lithium-ion batteries. ^[19] These three elements are concentrated in only 12 countries, with Australia being the only country, that has all three.

It has been estimated, that battery recyling can provide up to 60% of market demand for the three critical elements. ^[20] The ulimate reduction of Ni and Co demand is expected from wider adoption of lithium ion manganese oxide battery and of lithium iron phosphate battery. The demand reduction for lithium, particularly in the stationary energy storage market, is expected after commercialization of vanadium redox flow batteries and of sodium-ion batteries.

References