EV market facing tougher uphill from battery costs than vital mineral shortage

Rachel Koning Beals - 

Securing key minerals that help with the battery power in electric vehicles, as well as overall strength in the battery market, were key points of interest as one of the most widely followed updates on sustainable-energy markets was released Thursday.


© jeff kowalsky/Agence France-Presse/Getty ImagesEV market facing tougher uphill from battery costs than vital mineral shortage

BloombergNEF (BNEF) and the Business Council for Sustainable Energy (BCSE) released their 2022 Sustainable Energy in America Factbook. The data-heavy and comprehensive look at sustainable markets from EVs to energy efficiency, natural gas electricity, wind and solar is regularly referenced by key decision makers in these markets.

Top of mind as volatile stock markets supply-chain issues, the COVID-19 recovery and geopolitically driven energy price swings percolate was stability for EVs. Some of these factors have picked up in 2022, beyond the scope of the 2021 recap.

The panel presenting the report Thursday was asked if demand for EVs and their batteries will far outrun the resources going into production.

According to BloombergNEF’s Head of Americas Ethan Zindler the issue is under watch, but is not yet worrisome.

EV markets remain a small share of overall auto purchases but are only headed higher, including as more makes bring cars, SUVs and pickup trucks online. Market tracker LMC Automotive expects EVs to make up 34.2% of new U.S. vehicle sales by 2030, well above today’s roughly 4%.

Lithium, cobalt and nickel are key minerals used to make the lithium-ion batteries used in EVs and the pandemic and shipping delays has hurt the mining and transporting of these necessities.

“There are definitely some questions around that going forward and a lot of efforts under way to invest in making more critical minerals available in more parts of the world than currently is the case, but we don’t see that as an immediate problem,” BloombergNEF’s Zindler said.

“I think maybe a little bit more immediate might be higher prices for batteries,” he said.

But Zindler said those prices might be absorbed in part because the surging price of gasoline is making the economic trade-off for consumers between EV and conventional cars easier.

GasBuddy analyst Patrick DeHaan has said that the current high prices could continue to climb as high as $4 a gallon, excluding taxes.

A note from Rystad Energy Thursday said that as the energy transition quickens and countries and consumers strive to decarbonize, global battery demand could surge exponentially and approach nine terawatt-hours (TWh) annually by 2030, 15 times the levels seen in 2021.

Rystad Energy research shows that although global battery demand in 2021 stood at 580 gigawatt-hours (GWh), more than double 2020’s total, global supply was still able to keep up. However, that is set to change in the coming years as the appetite for battery technologies in passenger vehicles and stationary storage grows significantly, straining the supply chain, the market-watchers said in a report.

In a broader look at what’s ahead for sustainable energy, the BloombergNEF report said despite the COVID-19 pandemic, 2021 was a record-breaking year for investment in the energy transition and the deployment of renewable power battery storage and sustainable transportation

Global private investment in the energy transition soared in 2021 to $755 billion
with the U.S. setting a record of $105 billion.

This growth was fueled by strong consumer demand, unprecedented injection of new capital into companies, technologies, and projects, and a wave of supportive new policies.

“The conclusions drawn from the data not only point to the current momentum of the clean energy transition, but also underscore the need for additional public policy support that accelerates the speed and scale of the deployment of clean energy and energy efficiency solutions,” said Frank Maisano, senior principal, with a focus on energy markets, at the Washington-based Policy Resolution Group.

Also released Thursday, the Energy Information Administration issued its annual outlook. The report says U.S. energy consumption will increase over the next 30 years as population and economic growth outpace gains in energy efficiency.

EIA projects that renewable energy will be the fastest-growing source of energy through 2050, but oil and liquid fuels will remain the most-consumed source of energy.

Rod O’Connor, chief commercialization & engagement officer with the American Clean Power Association said growth in offshore wind power has been the market to watch. A record bidding has just wrapped on a new East Coast project. President Joe Biden has set a goal to install 30 gigawatts of offshore wind power by 2030, generating enough electricity to power more than 10 million homes.

According to BloombergNEF, relative energy costs of U.S. households remained historically low in 2021, even as consumers faced price increases due to supply chain disruptions and inflation.

But with 2022 came additional strains on energy and electricity, in large part as a Russian invasion of Ukraine roiled energy markets.

U.S. benchmark oilCL00 soared above $100 a barrel this week, closing at its highest since 2014. Natural gasNG00 is trading up some 30% so far this year.

The Biden administration has been treading carefully around oil and gas issues as fuel prices — particularly at the gasoline pump — shoot higher and inflation hits several pockets of the economy simultaneously. This week’s State of the Union address focused on helping households, while Republicans stepped up their calls for more U.S. drilling to cut reliance on Russia and other global giants that may pose security risks.