As the demand for electric vehicles (EVs) grows, so does the need for lithium, a key ingredient in batteries. But lithium is scarce and its production is concentrated in a few countries, creating a potential bottleneck for carmakers.
To avoid this, some automakers are striking deals with mining companies to secure their own supply of lithium. Ford, General Motors, Volkswagen and Toyota are among those who have invested in lithium projects or formed partnerships with miners.
By doing so, they hope to gain more control over the cost and availability of the raw material, as well as reduce their environmental impact. Lithium mining can be harmful to water resources and biodiversity if not done responsibly.
According to Benchmark Mineral Intelligence, a research firm, global lithium demand is expected to increase by more than six times by 2030, driven by EV sales. The firm estimates that the world will need 58 new lithium mines by then to meet the demand.
But developing new mines can take years and face regulatory and social hurdles. That’s why some carmakers are looking for alternative sources of lithium, such as geothermal brines, clay deposits or recycled batteries.
For example, Ford has invested in a start-up called Lilac Solutions, which uses a novel technology to extract lithium from brine fields in California. GM has partnered with Controlled Thermal Resources, another start-up that plans to produce lithium from geothermal power plants in the same state.
Volkswagen has acquired a stake in Ganfeng Lithium, a Chinese company that has mining operations in Australia, Argentina and China. Toyota has teamed up with Orocobre, an Australian miner that operates a lithium mine in Argentina.
These moves reflect the carmakers’ ambition to accelerate their transition to EVs and compete with Tesla, the market leader. Tesla has also expressed interest in mining its own lithium and has secured rights to a clay deposit in Nevada.
However, not all carmakers are convinced that mining is the best way to secure lithium supply. Some prefer to rely on long-term contracts with established suppliers or joint ventures with battery makers.
For instance, BMW has signed a 10-year contract with Livent, a US-based lithium producer that operates in Argentina. Hyundai and Kia have formed a joint venture with LG Energy Solution, a South Korean battery maker that sources lithium from various countries.
Ultimately, carmakers will need a diversified and sustainable supply chain for lithium and other battery materials, as well as more recycling and reuse of batteries, to meet their EV goals and reduce their carbon footprint.
