ANALYSIS: S&P Global Mobility on EV Battery Commodity Settlement – ​​Auto Remarketing | CarTailz

Geopolitical turmoil and the fragility and volatility of the critical raw materials supply chain could constrain planned expansion of battery production and slow the mainstream adoption of electric vehicles (EV) and the transition to an electrified future.

Rising prices of critical battery metals, as observed by S&P Global Commodity Insights, are threatening suppliers’ and OEMs’ profit margins. According to a new analysis by the S&P Global Mobility Auto Supply Chain & Technology Group, this situation was quickly reflected in increased component and vehicle prices.

Trade tensions and ESG concerns are also affecting the evolution of the commodity supply chain between markets. These collective developments contribute to the challenges of the transition to electric vehicles.

Reaching its volume targets will require a steep growth curve for an emerging industry. S&P Global Mobility forecasts an annual market demand of approximately 3.4 terawatt hours (TWh) of lithium-ion batteries through 2030 for OEMs to meet their BEV and hybrid vehicle sales targets. Mobility spaces as well as consumer electronics and the increasing demand for stationary energy storage. The 2021 output for the automotive industry: 0.29 TWh.

Elements like lithium, nickel, and cobalt don’t just magically appear and turn into EV batteries and other components. The development chain is long and complex, from difficult extraction to complex refinement. The intermediate steps between excavation and final assembly are a particular bottleneck in terms of know-how and market presence. China is currently the clear leader in material refinement, packaging and assembly of battery cells. The question is which other nations will step in to facilitate this industry transformation.

In terms of access to battery raw materials, the equation boils down to: who needs what, where does it come from, who supplies it, and who is best placed to benefit from this increasing reliance on a handful of critical elements?

The latest study from S&P Global Mobility evaluates the battery raw materials supply chain from extraction to the vehicle and identifies:

“A number of unknown companies will play an important role in processing and developing the battery electric vehicle (BEV) technology that will underpin the light passenger vehicles of the coming decade and beyond

“Potential trade tensions could make it difficult for major automotive companies to break away from an established, flexible and cost-effective supply of processed materials coming from or via mainland China

—Some OEMs are looking for the value and security of “fixed” supply chain relationships that extend from mine to vehicle to reduce reliance on volatile spot markets and/or the need to work with less established industry partners

The process flow below identifies a well-understood and well-documented supply chain for providing the required nickel and lithium for Tesla’s NCA-based cylindrical cells manufactured at its “Gigafactory” near Sparks, Nevada.

Now extrapolate that to the entire auto industry – and expand EV market share to encompass the optimistic projections for 2030 and beyond.

The largest amount of nickel required by any given vehicle brand for production in 2030 is predicted to be Tesla – estimated at about 139,000 tonnes (mT). However, evaluating the existing structure of their broader manufacturing base, we expect Volkswagen, General Motors and Stellantis to exceed this requirement amount. The development of modular battery packs that can be configured to fit multiple vehicle segments and accommodate a variety of battery chemistry options will ensure a degree of resilience to raw material supply constraints and price volatility.

“We have identified a total of 28 sources of battery grade nickel over the next 12 years to serve the light passenger vehicle market in 15 countries worldwide,” said Richard Kim, associate director of supply chain & technology at S&P Global Mobility Team. “However, the supply base for the upstream material processing steps and the formation of the basic battery cell cathode chemistry presents a challenging lack of geographic diversity.”

Research by S&P Global Mobility indicates that while the smelting or high pressure acid leach (HPAL) process is typically performed at the nickel recovery site, the conversion to nickel sulfate process is not.

Of the 16 companies currently capable of doing this process, 11 are in mainland China. By 2030, we expect the number of companies to increase to at least 24, of which 14 are expected to be in mainland China. We forecast mainland China to process 824,000 MT of nickel sulfate annually through 2030, with Chinese mining giant GEM’s supply of nickel sulfate to key Tesla supplier CATL expected to be the largest supply deal by tonnage. In contrast, we project North America and Europe to process only 146,000 mT.

We also need to consider risks when calculating access to cobalt – a material well known for its limited sources and ethical supply concerns. Battery-grade cobalt destined for electrified light passenger vehicles currently comes from just 18 mines totaling 52,000mT – of which 29,000mT is expected to be mined in 2022 in the Democratic Republic of the Congo (DRC). The United Nations has cited the DRC’s “deteriorating security situation”, its humanitarian crisis affecting 27 million people, as well as child labor practices and the ongoing guerrilla campaign waged against resource exploitation and food security.

Despite the conflicts plaguing the DRC, we still estimate that the country’s production for OEMs and suppliers will increase to 37,000 mT by 2030. However, dependency on the DRC will decrease from 56% to 17% in terms of total tonnage. We expect an almost tenfold increase in supply from countries like Australia and Indonesia, while countries like Vietnam, Finland and Morocco will make significant contributions by then. Given the dynamics of the procurement market, even for an OEM with tied cobalt contracts with miners, a portion of several automakers’ supplies remain unknown at this time.

“Geopolitics has combined with the desire for dominance and independence in the supply chain in the evolution of the battery raw materials supply chain to date,” Kim said. “China has established a solid lead. The development of their “Belt and Road” initiative clearly had in mind the automotive industry’s transition to electrification, with major strategic and logistical investments in Africa and Southeast Asia.”

Research by S&P Global Mobility clearly shows that established mainland Chinese-owned battery raw material supply and processing operations will continue to supply a majority of the world’s supply of lithium-ion batteries and their essential components.

However, the introduction of nationalist measures such as the US Inflation Reduction Act (and its consequent impact on the auto industry) seeks to redress some of this imbalance by encouraging the establishment of domestic supply chains in exchange for lucrative subsidies for both suppliers and the buying consumer.

The battery will be the defining technological and supply chain battleground for industry over the next decade, and access to the raw materials it contains will be critical. S&P Global Mobility will continue to assess the changing landscape of the battery raw materials market in real time, incorporating the latest industry developments and research.

Please contact for more information on our insights to help you make data-driven decisions with confidence.

Graham Evans is Director of Auto Supply Chain and Technology at S&P Global Mobility.

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