The EV revolution & the lithium conundrum

Dr Ashwath Sundaresan

November 17, 2021

On long car journeys, to kill the boredom, my 5-year-old son likes to play “is that an electric car?” pointing to every car that drives past.

It is a tad painful as I am constantly saying no until a Tesla or Leaf rarely drives past. That is changing. Demand for electric vehicles (EVs) is continuing to soar. A few weeks ago, Tesla released their latest quarterly earnings and reported over 240,000 EVs sold in the third quarter of 2021 – up by 70% from the previous year's same quarter. In the first half of 2021, roughly 2.7 million EVs were sold – a 168% increase compared to 2020.

This demand is likely to accelerate as governments across the world set up emission and EV targets. By 2035, 50% of all new car sales in China will need to be fully electric or hybrid. Similarly, the European Commission suggests that 30M EVs need to be on the road by 2030 to help support emission reduction targets.

Conservatively, around 30-40% of all vehicles on the road could be EVs by 2030. Considering that just under 80M car were manufactured in 2020, we could see 25-30M EVs produced annually in the coming decade.

The lithium conundrum

One of the biggest winners in the EV revolution is the lithium battery. Developed by Professors John Goodenough, Stanley Whittingham and Akira Yoshino, and successfully commercialised by Sony in 1991, the lithium battery represented a step change in the way we think about energy storage.

With at least 30 years of development efforts behind it, the lithium battery is now considered the gold standard technology and has made itself entrenched in the EV world. But the advancement of lithium batteries at the expense of other technologies has highlighted multiple challenges in our race to decarbonise.

Firstly, on average, a standard EV uses around 8-10kg worth of lithium in its batteries. In 2020, the world produced around 80,000 tonnes of lithium. If every ounce of mined lithium were used only for EV applications today, we would only produce between 8-10M EVs per year – a far cry from being 100% EV. Even if only a quarter of global cars produced is an EV, we would still need at least 3-4 times more lithium than is currently mined today.

Secondly, it is not just cars that need energy storage. The growing need for renewable energy generation is also going to place massive demand on future storage solutions. As countries look to shift away from coal and gas generation, intermittent sources like wind, solar and tidal will also need supporting storage solutions. By 2030, around 600GWh of storage will be required to support renewable projects (up from 166GWh in 2020).

As lithium supply constraints start to squeeze, the renewable sector will not be able to fully meet its storage needs with alternatives such as pumped hydro and mechanical storage. Our analysis indicates that at current rates of technology development, the sector will face a 225GWh storage supply.

Oh….and let's not forget that other industries, such as shipping and aerospace, are also electrifying.

So what next?

To address these challenges, we will need a multi-pronged approach. This includes:

  • Identifying new sustainable sources of lithium – Currently, lithium is predominantly mined from Australia, Chile, China and Argentina. Like most mining applications, it has a negative environmental impact. We need to do more to identify new sources of lithium that helps address our future demand needs while also minimising our impact to the environment. Pacific Channel’s investment into Geo40 is an example of a company doing this.
  • Developing new storage technologies – The limitations of lithium batteries are becoming more evident. In stationary storage, regulations are limiting their use due to safety considerations. We need to find alternative sources of cheap storage that can be used in a range of applications. A “one size fits all” approach will not work and customers will have specific requirements that make them choose one particular storage solution (e.g. power to weight, safety, portability etc…).
  • Develop new sustainable fuels – While fossil fuels are ubiquitous, certain applications will be better suited to alternative energy sources beyond batteries. The shipping industry is increasingly looking at ammonia as a fuel source due to its high energy density and ability to work with existing infrastructure. We need to look strategically at individual applications and look to develop alternative fuels bespoke to applications within the context of their infrastructure needs.
  • Crowd in renewables – The need for more renewable technologies will become more evident. Investing in the next generation of solar, wind and tidal/marine energy and driving down the cost curve will do a lot to support decarbonising. In addition, more renewable capacity will also have flow-on impacts around the feasibility and cost of producing green hydrogen (which benefits as more renewable supply is created).

I am cautiously optimistic about the future and am also excited to see New Zealand innovations addressing these big global challenges.

As we shift beyond a “lithium only” future, I am excited to see how Pacific Channel can help foster these technologies and scientists to help scale these to a global audience.

And maybe when my son is driving in his EV in 30 years' time with my grandchild, the boredom-killing game they might play - “Is that a petrol car?”