Powering the electric vehicle revolution

Confining the internal combustion engine to history is major milestone on the road to ‘net zero’. But there are numerous issues with its lithium-ion battery replacement that need to be addressed.

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Demand for transition metals to soar

The benefits of electric vehicles (EVs) to the environment are numerous. In the UK, the provisional data from 2022 shows that vehicles were responsible for about a third of UK carbon dioxide emissions (see table).

*LULUCF stands for "Land use, land use change and forestry". The negative numbers for this sector in some years are because it is estimated to be a net sink, with removals of carbon dioxide being greater than emissions.

Source: Office for National Statistics

However, EV manufacturing requires more energy and produces more emissions than manufacturing a conventional car because of the electric vehicles’ batteries. Lithium-ion battery production requires mainly due to the extraction and processing of minerals in EV batteries and production of the power cells.

Excluding the steel and aluminium that makes up the frame of the car, a conventional car uses 33.5kg of metals on average. An electric vehicle uses substantially more according to the International Energy Agency (see table below).

Source: International Energy Agency (IEA)

Of course, when the batteries are charged, it also matters how the electricity was initially generated – if coal power plants are being used then the environmental benefits is significantly reduced. Nevertheless, Research by the European Energy Agency found that, even taking electricity generation into account, the carbon emissions of an electric car are around 17%-30% lower than driving a petrol or diesel car. The emissions from electricity generation are dramatically improved when low carbon electricity is used.

However, demand for these metals will soar in the coming years as the world’s vehicles are electrified. General Motors announced last year that it planned to stop selling petrol or diesel-powered vehicles by 2035. Audi's aims to stop production by 2033, and many other major auto companies are following suit. In fact, according to a Bloomberg analysis, two-thirds of the world's passenger vehicle sales will be EVs by 2040.

Sourcing the lithium for batteries

There is a major issue with the lithium-ion batteries that are fuelling the move to EVs – getting hold of enough lithium and other metals that make up these fuel cells.

In April, Chile's President Gabriel Boric announced he would nationalise the country's vast lithium industry to boost the economy and protect the environment. The surprise announcement is one of a trend of countries using resource nationalism to boost their interests. Chile is the world's largest producer of lithium, a key component in batteries used in electric vehicle and with and China produce 90% of the world’s lithium today.

The top 12 countries in the world by identified lithium resources, according to the US Geological Survey are:

  • Bolivia: 21m
  • Argentina: 19m
  • Chile: 9.8m tons
  • Australia: 7.3m tons
  • China: 5.1m tons
  • DR Congo: 3m tons
  • Canada: 2.9m tons
  • Germany: 2.7m tons
  • Mexico: 1.7m tons
  • Czechia: 1.3m tons
  • Serbia: 1.2m tons
  • Russia: 1 million tons

The relatively limited supply of these materials also produces challenges such supply chain and dependency issues, which the Covid-19 crisis showed could be a major issue and threaten the security of supply.

Lithium producers are started to speak loudly on a potential supply crunch, as traditional carmakers now start to invest in EV production. They cite delays in mine permitting, staffing shortages and cost inflation are major sector challenges. At a conference in June, Stu Crow, chairman of Lake Resources, told Reuters: "You could end up in a crisis situation where the battery companies don't have the security of (lithium) feedstock”.

Lake Resources recently announced a three-year production delay at it Kachi lithium project in Argentina due to power supply and other logistics concerns. Albemarle, the world's largest lithium producer, is growing rapidly across the Americas, Asia and Australia. Still, it expects global lithium demand to exceed supply by 500,000 tonnes in 2030.

An analysis by the McKinsey Battery Insights team forecast that the entire lithium-ion (Li-ion) battery chain, from mining through recycling, could grow by over 30% annually between 2022 and 2030, when it would reach a value of more than $400bn.


It’s very difficult to get an accurate figure of how many lithium-ion batteries are recycled across the world, but it is generally accepted that the figure is about 5%.

The recycling of lithium-ion batteries is expensive and challenging. Unlike traditional batteries, they cannot be shredded down into a powder for recycling. That’s because the are many different components and there is a risk of fire or even an explosion if they're not disassembled carefully and it results in low-value products that are relatively impure.

However, as the amount of amount of lithium available for recycling increases, better technologies for recycling end-of-life batteries is expected to emerge.

Consultancy McKinsey and Co estimates that the global supply of batteries for recycling will increase at 25% a year until 2040.

Indeed, the UK’s first large-scale lithium-ion battery recycling plant is in the process of being commissioned, having secured approvals in April. Recyclus obtained an Environment Agency permit, enabling the company to store up to 140 cubic metres of lithium-ion batteries daily and process up to 22,000 tonnes annually.

The plant, owned 48.25% by UK listed group Technology Minerals and run by the Recyclus Group, is in Wolverhampton. The operation produces what is known as “black mass”, which can be resold into the battery supply chain.

Government subsidies to drive investment

Government subsidies are likely to drive this investment. The US Inflation Reduction Act (IRA) 2022 allows recycled battery materials including lithium, cobalt, and nickel to qualify for significant tax credits, even if those materials were not originally mined in the US or in countries with which the United States has free-trade agreements.

Regulatory pressure is Europe is also encouraging organisations to recycle. The European Union has instituted its End-of-Life Vehicles Directive that mandates vehicle makers take end-of-life batteries from their products.

Across the battery recycling value chain – from collection to metal recovery – revenues are expected to grow to more than $95bn a year by 2040 worldwide, predominantly driven by the price of the recovered metals, expected battery cell chemistry adoption and regionalisation of supply chains, according to McKinsey. It thinks the monetary value generated per ton of battery material could approach approximately $600 by as early as 2025.

Much investment is needed to increase the woeful recycling figure of 5% of lithium-ion batteries worldwide. However, the growing value and strategic importance of battery materials in the green revolution – plus regulatory and tax incentives to reuse and recycle – should boost investment significantly. Still, a future supply crunch for lithium is very possible indeed, with a negative impact on plans to transition to ‘net zero’.

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Powering the electric vehicle revolution

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