E-Mobility: Roland Berger Expects Exploding Demand for Critical Raw Materials
The transition to a non-fossil and CO2-neutral industry and economy, particularly the energy and propulsion transformation in the automotive and transportation sectors, is causing a rapid global increase in the demand for certain raw materials. This is demonstrated by a study in which experts from Roland Berger analyzed the global market for critical raw materials and developed solutions for affected companies. By the year 2040, the demand for lithium will be 15 times higher than in 2020, while for nickel, it will be 2.5 times higher. Similar projections apply for copper, neodymium, and other minerals. The supply of these essential raw materials is struggling to keep up: at least until 2030, the global market supply of lithium and nickel will just barely meet demand.
At the same time, there are significant planning uncertainties for suppliers and buyers, such as estimating how electric vehicle sales will develop. Additional risks, such as supply bottlenecks and labor shortages, further exacerbate the problem, warn the consultants.
"The main reason for the increasing demand for lithium, nickel, and other critical raw materials is the exploding demand for batteries for electric vehicles and energy storage systems," explains Wolfgang Bernhart, Partner at Roland Berger. "But certain raw materials and refined products are also indispensable for technologies like photovoltaics and wind power as well as for the expansion of the power grids."
China as a Driver - and E-Mobility as the Major Consumer
In 2020, around 265 gigawatt-hours (GWh) of capacity for lithium-ion and sodium-ion batteries were demanded, and this demand is expected to rise to almost 5,000 GWh by 2030. China is the largest market, and e-mobility is the sector with the highest demand. Rapidly growing areas like solar energy, wind power, power grids, and e-mobility will, according to the International Energy Agency, constitute almost 90 percent of lithium demand by 2040. For nickel and cobalt, it will be 60 to 70 percent, and for copper and rare earth elements, more than 40 percent.
Resilient Supply Chains as Risk Mitigation
In light of the drastically increasing demand, the availability of resources is becoming a critical point for downstream industries such as battery cell manufacturers or the automotive industry. While the mined quantities of lithium, nickel, and cobalt are expected to be sufficient by 2030 according to current capacity plans, new mining projects are necessary, which may take up to 15 years to become operational depending on the mineral. Given these timeframes, uncertainties are particularly problematic: Who knows if disruptive technologies will change market conditions in the meantime? Or if geopolitical risks will expand and affect supply chains?
Uncertain Market Development for E-Cars
The extent to which individual factors can have an impact is shown by the forecasts for the development of electric vehicle sales and thus the future demand for battery raw materials: Depending on the scenario, estimates for the cumulative required investments in the extraction and refining of lithium, nickel, and cobalt as well as in the production of cathode materials by 2030 range between 165 and 360 billion US dollars.
"These uncertainties affect all players in the raw material value chain, from mining companies to the automotive industry," says Bernhart. "Particularly for battery cell and automotive manufacturers, but also for companies in energy technology, it is therefore essential from our point of view to make their supply chains more resilient to minimize risks in the supply of critical raw materials."
For this, the Roland Berger experts recommend a scenario-based approach among other instruments: Possible developments in raw material and sales markets, technologies, political trends, and other factors are played through – up to the "Black Swan". These scenarios serve as a central basis for decisions, for example about purchase agreements, financial safeguards, but also potential investments in projects or technologies. "The goal," says Bernhart, "must be to make supply chains stable and at the same time flexible, so that a quick response is possible if needed."
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