Electric cars: the price of lithium skyrockets, supply does not follow demand

Electric cars: the price of lithium skyrockets, supply does not follow demand

The price of lithium is so “crazy that we may have to get into mining and refining” with Tesla: in a tweet, Elon Musk indicated his desire to invest in strategic metals, shaking the entire automotive industry, but also the mining sector.

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“Until now, car manufacturers bought directly the products and spare parts they needed. Today they realize that this is not enough and that they have to take control of part of the resources, in particular batteries,” Christophe Poinssot, deputy director general of the Bureau of Geological and Mining Research (BRGM), told AFP. ).

By 2035, electric vehicles are expected to replace gasoline engines in Europe.

And in the midst of all the strategic metals for the manufacture of car batteries, lithium, nickel, cobalt in particular, “there is simply one essential element for the next ten years, which is lithium”, emphasizes Yves Jegourel, professor of Economics of the professor of raw materials at the National Conservatory of Arts and Crafts (CNAM) and co-director of the annual guide to raw materials CyclOpe, published this Wednesday.

Mining production of this essential element, currently concentrated in Australia and Latin America, cannot keep pace with the dramatic increase in global demand.

Dozens of huge battery factories have been announced all over the planet, and each battery needs about 5 kilos of lithium.

In 2021, the price of lithium carbonate for spot contracts in the United States doubled to $16.72 per kilo, Cyclope reports.

Similarly, for lithium hydroxides, increasingly in demand for car batteries, prices nearly doubled (+97%) to $18.82/kg.

Under different scenarios, the demand for lithium could quadruple or even multiply by six in 2030 compared to 2021, up to more than 500 kilotons per year, according to a report by the International Energy Agency.

Beyond the manufacturers, the States themselves are immersed in the logic of securing these strategic metals for the ongoing energy transition.

In Luxembourg, the European Council dedicated to competitiveness under the French presidency must address the issue in particular this Thursday, evoking the possibility of creating strategic reserves, or preparing the ground for the recycling of batteries in order to “keep” the materials in the old continent.

For the builders, the statement by the head of the US manufacturer Tesla, Elon Musk, on April 8 “does not mean that they themselves will become mine operators”, judges Mr Poinssot.

“That means that from a capitalist point of view, they might go to the capital of a mine or to a mining operator, to secure their supply chain. There is already Tesla who is looking ”, she analyzes.

Volkswagen and BMW have thus entered the capital of Northvolt, the Swedish group of electric batteries.

In addition to several battery factories across Europe, the new European giant plans to build a large lithium refining plant near Lisbon, with the Galp tanker.

The Stellantis group (born from the merger of Fiat-Chrysler and Peugeot-Citroën), but also Renault and Volkswagen have signed contracts with the German mining project Vulcan, to obtain lithium supplies.

Volkswagen also plans to create a joint venture with the Belgian group Umicore, a specialist in materials for clean mobility, to supply cathode materials (one of the battery elements) to the group’s European factories.

Renault also joined the Veolia and Solvay consortium in March that built a pilot plant to improve the recycling of metals used in battery cells, such as nickel, lithium or cobalt, a key alternative to mining.

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