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Lithium supply shortage could potentially affect EV production

Lithium supply shortage could potentially affect EV production

tech innovation 2022

Most recent demand report from advanced propulsion center revealed that EV production could be negatively affected by a lack of lithium supply.

The Advanced Propulsion Center (APC) insight report was launched on 21 June 2022, and aims to define the challenges faced by the automotive industry amid the shortage of lithium supplies. The next quarter demand forecast will explore the impact of increasing lithium supply as well as reducing demand.

The Center for Advanced Propulsion’s most recent demand report has revealed several Subject In relation to the shortage of lithium supplies, including:

  • 25% of vehicles manufactured in Europe are projected to have LFP batteries by 2030, reducing dependence on nickel;
  • There is expected to be a modest global lithium deficit in 2025, which will increase substantially by 2030;
  • Investment is still needed to grow the lithium industry, as battery-grade capacity takes years to build up;
  • Much more can be done to reduce demand with effective use of lithium;
  • Calls for UK investment to secure future battery material supply chains;
  • Opportunity for the UK to capitalize on the anode active material supply gap in Europe; And
  • World battery demand for the automotive sector could exceed 2,800 GWh by 2030, more than double the 2025 forecast.

As battery EV ownership grows, so do production options

With the rise in ownership of battery electric vehicles (BEVs), European original equipment manufacturers (OEMs) are aware of the need to look for alternatives and are aiming to reduce their reliance on nickel and cobalt in battery production. APC’s latest forecast predicts that 25% of all installed battery capacity in European-made vehicles will be lithium iron phosphate (LFP) or its derivatives.

Additionally, the findings of the most recent APC quarterly demand forecast also emphasize imminent lithium shortages, which could delay global efforts to manufacture enough BEVs to meet anticipated consumer demand in 2030. The most recent APC estimates suggest that in 2030 the global lithium deficit could be reduced to just 25 million of the estimated build-up of 40 million BeV in that constrained scenario.

Using LFPs in Car Batteries: Becoming a Global Priority

The use of LFP in car batteries has historically been favored by manufacturers in China. Adoption outside China was limited due to the different IP arrangements and the perceived high energy density of NMC cells. However, recent improvements in the energy density of LFP batteries as well as potentially improved safety, reduced cost, cycle life, and reduced material supply concerns have resulted in many OEMs re-thinking their battery strategies.

Thus, several major automakers have either expressed their intention or expressed interest in introducing LFP batteries. Tesla has been a first mover on this with the LFP variant accounting for nearly 50% of global vehicle deliveries in the first quarter of 2022.

European OEMs, such as Volkswagen, which produce entry-level segment vehicles, will likely lead the charge in LFP adoption across the region. However the high-performance segment, such as large vans and sedans, may also see modest interest in LFPs, especially where battery durability is important. A wide spectrum of other OEMs, from new start-ups like Rivian to established OEMs like Ford, have now resolved to use LFP batteries in larger vehicle models.

Importance of meeting the demand for BEV production

Regardless of the proportion of LFP, NMC or other chemistries adopted globally, battery-grade lithium will still be in huge demand. Julian Hetherington, Director of Automotive Transformation at APC, said, “The lithium industry is still relatively small compared to other technical metals, and we understand the challenges facing this industry to meet the demands of BEV production in the years to come. “

“The UK government and industry are making the right investments in building Gigafactories to not only secure vehicle assembly, but also to activate the UK supply base for high-value components such as cathodes and anodes. We also recognize the importance of securing supply chains.This is why APC supports UK feasibility study projects exploring lithium extraction and refining through our Automotive Transformation Fund.

Investment in supply is only one side of the lithium equation.

“In the face of a future lithium squeeze, the industry needs further investment to increase the supply of lithium chemicals and implement measures that reduce our demand for it,” said Luke Bates, automotive analyst at APC.

“We cannot rely solely on supply-side measures to increase the primary supply of battery-grade lithium or think that recycling is a silver bullet. Using smaller or modular batteries, in entry-level vehicles Introducing sodium-ion, and the adoption of fuel cells for larger, heavier vehicles are all possible avenues we can explore.”

Other important data and findings in the latest quarterly demand forecast include:

  • Work needs to continue to localize UK supply chains so that OEMs can export EVs tariff-free; And
  • Limited availability of anode active materials in Europe has the potential for large investments for local supply.

What is APC?

APC is an organization working by the UK government and the automotive industry to accelerate the transition to low carbon transport solutions. It uses their unique insights gained from working closely with the global automotive industry to provide insights and forecasts to support the government. This includes taking strategic policy decisions and providing clarity to the industry about projected demand, product and technology roadmaps.

Q1 2022 Automotive Industry Demand Report is now live and available to read.

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