Typical electric car set-up

Making cars is one thing, selling them another. A production slowdown is only a problem if demand exceeds supply, and to date demand for EVs has been weak in most countries. More expensive batteries forcing prices up obviously won’t help shift them. Maybe the mining firms have doubts about sales volumes and don’t want to over-produce, which could lead to price cutting.
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The global market share of electric vehicles is set to rise so quickly that battery manufacturers will not be able to meet production requirements, a Rystad Energy analysis shows.

The reason is that the mining capacity of lithium – a key ingredient in EV-purposed batteries – will fall short of demand unless investments in new mines accelerate, says OilPrice.com.

Under the current pipeline, capacity deficits could triple lithium prices towards the end of this decade.

While today’s lithium mining capacity can comfortably satisfy demand from the electric vehicle market, the fast rise of electric vehicles is set to create a serious lithium supply deficit already from 2027.

This imbalance will grow larger as the years pass and is set to cause delays for the production of millions of electric passenger cars, even when planned new mining projects add their capacity in the coming years.

More investment decisions to build new lithium mining projects need to be added to the pipeline, and fast, as Rystad Energy estimates it can take between five and seven years to develop, finance, and build an average new project.

In fact, based on our current lithium mining capacity outlook and the share of lithium demand that electric passenger vehicles will create, we estimate that the supply deficit is poised to delay the production of the equivalent of around 3.3 million electric vehicles with a battery of 75 kilowatt-hours (kWh) already in 2027.

The impact will grow quickly, to around 9 million EVs in 2028 and some 20 million electric cars in 2030.

“A major disruption is brewing for electric vehicle manufacturers. Although there is plenty of lithium to mine in the ground, the existing and planned projects will not be enough to meet demand for the metal. If more mining projects are not added to the pipeline quickly, the energy transition of road transport may need to slow down,” says James Ley, Senior Vice President at Rystad Energy’s Energy Metals team.

Full article here.

via Tallbloke’s Talkshop

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April 15, 2021 at 01:30PM