Cell-side analysis

Could the EV boom run out of juice before it really gets going?

Quite possibly, for want of batteries

Electric vehicles (EVs) appear unstoppable. Carmakers are outpledging themselves in terms of production goals. Industry analysts are struggling to keep up. Battery-powered cars may zoom from 10% of global vehicle sales in 2021 to 40% by 2030, according to Bloombergnef. Depending on whom you ask, that could translate to between 25m and 40m EVs a year. They, and the tens of millions manufactured between now and then, will need plenty of batteries. Bernstein reckons that demand from EVs will grow six-fold by 2030 (see chart 1), to 2,700 gigawatt-hours (GWh). Rystad puts it at 4,000 GWh.

Such forecasts explain the frenzied activity up and down the battery value chain. The ferment stretches from the salt flats of Chile’s Atacama desert, where lithium is mined, to the plains of Hungary, where on August 12th CATL of China, the world’s biggest battery-maker, announced a €7.3bn ($7.5bn) investment to build its second European "gigafactory”.

It is, however, looking increasingly as though the activity is not quite frenzied enough, especially for the Western car companies that are desperate to reduce their dependence on China’s world-leading battery industry amid rising geopolitical tensions. Prices of battery metals have spiked (see chart 2) and are expected to push battery costs up in 2022 for the first time in more than a decade.

In June Bloombergnef cast doubt on its earlier prediction that the cost of buying and running an EV would be as low as for a fossil-fuel car by 2024. More distant targets, such as the EU’s coming ban on new sales of carbon-burning cars by 2035, may not be met. Could the EV boom run out of juice before it gets going in earnest?