Demand for electric vehicle (EV) batteries will increase from the current 340 GWh to over 3,500 GWh by 2030. The findings were published in the International Energy Agency’s (IEA) report, ‘Global Supply Chains of EV Batteries.’

While all EV battery supply chain stages must scale up, IEA emphasizes that extraction and processing are particularly critical due to long lead times. The agency states governments must leverage private investment in sustainable mining and ensure precise and rapid permitting procedures to avoid potential supply bottlenecks.

Innovation and alternative chemistries that require smaller quantities of critical minerals and extensive battery recycling can ease demand pressure and avoid bottlenecks. Incentivising battery “rightsizing” and adopting smaller cars can also decrease demand for critical metals.

IEA maintains that governments should strengthen cooperation between producer and consumer countries to facilitate investment, promote environmentally and socially sustainable practices, and encourage knowledge sharing.

The report also suggests that governments should ensure traceability of key EV components and monitor the progress of ambitious environmental and social development goals at every stage of battery and EV supply chains.

Dependence on China

China produces three-quarters of all lithium-ion batteries and is home to 70% of production capacity for cathodes and 85% for anodes—both key components of batteries. Over half of lithium, cobalt, and graphite processing and refining capacity is in China.

Europe is responsible for over one-quarter of global EV assembly but contributes very little to the supply chain apart from cobalt processing at 20%. The United States has an even smaller role in the global EV battery supply chain, with only 10% of EV production and 7% of battery production capacity.

Korea and Japan have considerable shares of the supply chain downstream of raw material processing, particularly in the highly technical production of cathode and anode material. Korea is responsible for 15% of global cathode material production capacity, while Japan accounts for 14% of cathode and 11% of anode material production. Korean and Japanese companies also produce other battery components such as separators.

Most minerals are mined in resource-rich countries such as Australia, Chile, and the Democratic Republic of Congo and handled by a few major companies. Governments in Europe and the United States have bold public sector initiatives to develop domestic battery supply chains. Still, most of the supply chain will likely remain Chinese through 2030.

Rise in demand

Pressure on the supply of critical materials will continue to mount as road transport electrification expands to meet net-zero ambitions. Demand for EV batteries will increase from around 340 GWh today to over 3,500 GWh by 2030.

Additional investments are needed in the short term, particularly in mining, where lead times are much longer than for other parts of the supply chain. Certain cases require more than a decade from initial feasibility studies to production and then several more years to reach nominal production capacity.

The projected mineral supply until the end of the 2020s is in line with the predicted demand for EV batteries. The supply of minerals like lithium needs to rise by one-third by 2030 to fulfill the demand for EV batteries.

There are other variables affecting the demand for minerals. If current high commodity prices endure, cathode chemistries could shift towards less mineral-intensive options. For example, lithium-iron phosphate (LFP) cathode chemistry does not require nickel or cobalt but comes with a lower energy density and is, therefore, better suited for shorter-range vehicles.

LFP share of global EV battery supply has more than doubled since 2020 because of high mineral prices and technology innovation, primarily driven by increasing uptake in China.

Innovation in new chemistries, such as manganese-rich cathodes or sodium-ion, could further reduce pressure on mining. Recycling can also reduce the demand for minerals. Although the impact between now and 2030 is likely to be small, recycling’s contribution to moderating mineral demand is critical after 2030.

In a recently released report, IEA said cobalt and nickel prices more than doubled from March 2021 to May 2022, stressing the supply chain as battery demand increased.

In an earlier report, IEA had stated that the sale of electric cars more than doubled to 6.6 million in 2021 compared to 3 million in 2020, accounting for 9% of the global car market.