Car manufacturers are investing substantially in battery production, but the stranglehold that China has on critical minerals is causing difficulties.
Some carmakers are investing in European battery plants, while some are signing deals with South Korean producers, but all are struggling with the supply crunch, according to the Financial Times (subscription).
The problem: The price of critical minerals is skyrocketing, thanks to the supply shortage.
- A telling data point: “The price of lithium carbonate hit an all-time high in April and is still eight times what it was at the start of last year.”
- Meanwhile, cobalt and nickel are also likely to be in short supply within this decade, as Scott Yarham of S&P Global Commodity Insights told the FT.
Who’s investing: Many of the biggest carmakers have made substantial partnerships, as they continue to develop electric vehicles:
- “[GM and Ford] have signed deals with Korean battery producers LG and SK On, respectively, to supply parts for their electric ambitions and, in General Motors’ case, help build four dedicated plants in the U.S. with a total of 160 gigawatt hours of production by the middle of the decade.”
- “Stellantis, the group behind Peugeot, Fiat Chrysler and Jeep, has established similar partnerships with LG and Samsung SDI.”
Up the chain: There’s another bottleneck in the battery supply chain—expertise.
- Mathias Miedreich, CEO of Umicore, a European producer of battery components, “warns that there will be ‘a scarcity of supply’ of battery cell component manufacturing, even if there is enough investment in mining and battery plants, due to the intricacies of the production process.”
You said it: “‘Not so long ago, many in Germany believed that battery cells . . . could always be ordered from Asia,’ said German Chancellor Olaf Scholz during a visit to Salzgitter [the location of a VW battery plant] last month. ‘Now we know better.’”
The NAM’s view: As we wrote yesterday, the NAM is advocating strenuously for further investments in critical minerals production. It is urging the Biden administration to reform its permitting process for mining projects and working with policymakers to increase investments in the U.S.
In related news . . . In case you missed it, Panasonic will build a $4 billion battery plant in Kansas, with the new capacity complementing its production at its Nevada facility.