This white paper analyzes fundamental ZEV supply questions regarding zero-emission vehicles. It assesses how planned electric vehicle manufacturing compares to government near-term regulations and long-term targets, and how future battery production capacity compares to global demand. The analysis quantifies the number of materials such as lithium, nickel, cobalt, and graphite that are needed in the electric vehicle transition and compares them against raw materials reserves. The work also assesses the potential for large scale battery recycling to reduce the need for additional mining and discusses the opportunity for government policies to maximize ZEV supply. The analysis supports the following conclusions:
Continued global efforts are needed to ensure that electric vehicle, battery, and material supply demands are met. The analysis indicates that electric vehicle and battery production can meet targets through 2025. Although battery production is tight in 2021-2022, the expanded battery cell and pack production already under development is well above the required near-term ZEV deployment from regulations around the world. What is less clear is whether the pace and scale of upstream raw material mining and refining into battery-grade quality is sufficient to keep pace with battery cell, pack, and vehicle manufacturing. Capital investment in electric vehicles, including $180 billion in vehicle manufacturing and $500 billion in battery procurement, will need to flow upstream to unlock more mining and spur expanded refining capacity for battery cell production.
Raw material reserves are more than sufficient to support the global transition to ZEVs. The transition to ZEVs will increase the annual need for cobalt, manganese, lithium, nickel, and graphite by 5 to 23 times from 2020 to 2035. Industry innovation and commercial developments toward increased battery energy and reduced amounts of key materials (most prominently, at least 75% less cobalt per battery pack kilowatt-hour), will significantly reduce global material supply issues, even as ZEV deployment increases. Battery material needs for global passenger electric vehicles by 2035 reach 8% to 14% of proven global reserves for lithium, nickel, and cobalt.
A significant potential ZEV supply constraint is the supply of electric vehicle models to consumers. Despite the less-certain upstream developments to increase material mining and refining capability, the planned increase in electric vehicle and battery pack production volumes exceed the annual global demand by 2025. This is more than sufficient to cover the world‚Äôs regulatory requirements in China, Europe, and North America that have been adopted through 2020. However, because some states and countries have more aggressive 100% ZEV targets, there will be constraints from market to market (e.g., California in the United States, Québec and British Columbia in Canada, and Norway and the United Kingdom in Europe).
Battery recycling practices will have a profound effect on long-term ZEV battery material supply. Developing recycling streams to recover approximately 90% of the critical battery materials can significantly reduce the need for raw material mining from 2040 onward. When accounting for second-life use of batteries after electric vehicle end-of-life, recycling can reduce the need for new material mining by 20% in 2040 and 40% in 2050. With recycling, the cumulative use of lithium and nickel could reach 25% of known global reserves by 2050, and 30% for cobalt. This is approximately a 25% reduction in the cumulative use of materials as a percentage of known global reserves in 2050 compared to a no-recycling case. Beyond 2050, as greater volumes of batteries become available for recycling, the need for new mining can be further reduced.
Comprehensive industrial-to-consumer policies are key to minimizing ZEV supply chain bottlenecks. Industry incentives, including for battery raw material supply chain development, ensure key components reach higher volumes more quickly. Vehicle-level regulations for 2030-2040 requiring higher levels of electric vehicle production with sufficient lead time create certainty for industry investments and drive volume for more models to reach more markets. Demand-side support, such as incentives and infrastructure, provides near-term consumer support as technologies reach a greater scale. Continued tracking of the supply chain is key to assessing where issues could emerge. Government actions can help bolster the financial viability of raw material extraction and refining to ensure battery-grade materials are sufficient to feed the projected demand. Cross-industry collaboration, public-private partnerships, and regulatory and incentive measures are warranted to ensure batteries are designed for recyclability, collected upon end-of-use, and ultimately recycled. Government regulations for battery recycling would optimally focus primarily on the materials with the highest value and the greatest supply risk.