Battery Metals

More than 90% of vehicle-owning households in the United States would see a reduction in the percentage of income spent on transportation energy—the gasoline or electricity that powers their cars, SUVs and pickups—if they switched to electric vehicles. And more than 90% of households that replace gas-powered vehicles with EVs would also reduce the amount of climate-warming greenhouse gases they generate, according to a new University of Michigan study. However, more than half of the lowest-income U.S. households (an estimated 8.3 million households) would continue to experience high transportation energy burdens, defined in this study as spending more than 4% of household income on filling the tank or charging up. “Our results confirm the potential for widespread benefits from EV adoption,” said study corresponding author Joshua Newell, an urban geographer at the U-M Center for Sustainable Systems, part of the School for Environment and Sustainability. “However, EV ownership in the U.S. has thus far been dominated by households with higher incomes and education levels, leaving the most vulnerable populations behind. Policy interventions are needed to increase EV accessibility so that all Americans can benefit from the EV transition.” The new study is scheduled for publication Jan. 11 in Environmental Research Letters. It is the first study to consider the spatial variation of both EV energy costs and greenhouse gas emissions across the country. It’s also the first study to examine EV energy costs through the lens of distributive justice by calculating the EV energy burden (percentage of income spent on EV charging) for the entire United States. Distributive justice concerns the fair distribution of benefits and burdens. EVs currently account for about 1% of the cars, SUVs and pickups on American roads. If all those vehicles were replaced with new EVs, the transportation energy burdens and associated greenhouse gas emissions would vary widely from place to place, according to the new study. Reductions in both transportation energy burden and GHG emissions would be especially pronounced on the West Coast and in parts of the Northeast, due largely to cleaner energy grids and lower electricity prices. Households in some locations could reduce their annual transportation-energy costs by $600 or more, and cut their annual carbon footprint by more than 4.1 metric tons of carbon dioxide equivalents, by buying a new EV. But lower-income households in other parts of the country wouldn’t fare as well, Newell said. Very high EV transportation energy burdens, ranging from 10% to 64%, would persist for the lowest-income households and would be concentrated in the Midwest and in the two states with the highest electricity prices: Hawaii and Alaska. Eight percent of U.S. households (an estimated 9.6 million households) would see low savings in both transportation energy burden and greenhouse gas emissions by choosing an EV. “Both low” households are scattered across the country, with about half of them in Midwest states, including Michigan. Factors that contribute to those low EV savings include cold winter temperatures that impact battery performance, electrical grids that rely largely on fossil fuels, or electricity prices that are higher relative to gasoline prices. According to the study, the lowest-income households would continue to experience the highest transportation energy burdens. Essentially all households with incomes of less than 30% of the local median would experience moderate or high EV energy burdens. “We identified disparities that will require targeted policies to promote energy justice in lower-income communities—including the subsidizing of charging infrastructure—as well as strategies to reduce electricity costs and increase the availability of low-carbon transportation modes such as public transit, bicycling and car sharing,” said study lead author Jesse Vega-Perkins, who did the work for a master’s thesis at the U-M School for Environment and Sustainability. “Our analysis indicates that future grid decarbonization, current and future fuel prices, and charging accessibility will impact the extent to which EV benefits will be realized, including lowering transportation energy burdens for low-income households,” said study senior author Greg Keoleian, director of U-M’s Center for Sustainable Systems. The study used a geospatial model to evaluate three factors associated with the EV transition: transportation energy burden, fuel costs (meaning the cost of gasoline or the electricity needed to charge an EV) and greenhouse gas emissions. The analysis does not include vehicle purchase cost. Total cost of ownership of EVs is the focus of a current study by the Center for Sustainable Systems. The researchers calculated transportation energy burdens and lifetime greenhouse gas emissions of new battery-electric and internal-combustion vehicles at the census tract level. Then they compared the energy burdens of the new vehicles to the energy burdens of the current on-road vehicle stock. Finally, they compared the spatial variation and extent of energy burdens and greenhouse gas emissions for EVs and internal-combustion vehicles across the U.S. Transportation accounts for the largest portion of the greenhouse gases emitted in the United States, with direct emissions from passenger vehicles and light-duty trucks comprising roughly 16% of U.S. emissions. Electrification is seen as the primary pathway to reducing those emissions.

Japan will send a delegation to meet with Canadian battery and mining companies early this year, while Canada is planning a trade mission to Japan later in October, the leaders of both countries announced on Thursday after meeting in Ottawa.

As this year’s host of the Group of Seven (G7), Japanese Prime Minister Fumio Kishida came to Canada to meet Canadian Prime Minister Justin Trudeau before continuing onto Washington, where he will sit down with US President Joe Biden on Friday.

“This spring, we’re… looking forward to hosting an important business delegation from Japan,” Trudeau said. “They’re planning to be meeting with Canadian battery and mining companies and potential partners.”

The two leaders hosted a lunch meeting with Canadian business leaders where “they highlighted the growing and exciting business potential between the two countries,” according to a statement from Trudeau’s office.

Canada has been seeking to woo foreign investment the electric vehicle (EV) supply chain, in particular in mining and processing its abundant critical minerals used in EV batteries, especially for countries who want to reduce their dependence on China for those materials.

Earlier in the day, Kishida said that Japan is looking to Canada to “play a major role, as a resource-rich country” on energy.

Japan’s Mitsubishi Corp, through a subsidiary, owns a 15% stake in the LNG Canada joint venture led by Shell, which Trudeau said was the “largest private investment in Canada.” The liquefied natural gas terminal is being built in British Columbia to supply Canadian natural gas to Asia.

The two leaders agreed that “China is a central challenge,” Kishida said during the news conference, and both reiterated their support for the dismantling of North Korea’s nuclear weapons program.

To counter China’s influence in the region and increase its own strategic sway, Canada launched an Indo-Pacific strategy in November.

Kishida welcomed Canada’s diplomatic pivot toward Asia and its efforts to deepen ties with a fast-growing Indo-Pacific region of 40 countries accounting for almost C$47 trillion ($35.2 trillion) in economic activity.

“The two leaders discussed their concerns about China’s actions in the region and agreed on the importance of a coordinated approach to security in the Indo-Pacific,” Trudeau’s office said in a statement.

Vale (NYSE: VALE), the world’s second largest iron ore miner and top nickel producer, has shortlisted suitors for 10% of its base metals business estimated to be worth nearly $2.5 billion.

The Brazilian miner, which last year hired advisers to assess options for the unit, told the Financial Times that top bidders included carmakers, state investors and pension funds.

The stake sale is part of Vale’s decision to separate its iron ore operation from its copper, nickel and platinum assets, into a new firm named Vale Base Metals that will be based in the UK, according to Brazilian media.

The spin-off, yet to be approved by the board, would have independent governance and a board that includes deep underground mining and electric-vehicle specialists.

Vale Base Metals would have nickel mines in Canada and Indonesia, copper mines in Brazil, and interests in cobalt and platinum group metals.

“This thing can get even bigger than Vale. Not tomorrow, not even next year — when you look long-term,” chief executive Eduardo Bartolomeo told FT.com.

Separating the two sides of the business is key to accessing “competitive” capital needed for an estimated $20 billion of base metal investments, Bartolomeo said in December.

The plan has been on Vale’s cards for years as most nickel and copper assets the company has were acquired via the $17 billion acquisition of Canada’s Inco, in 2006.

As the world tries to wean itself off dependence on China for crucial battery materials, India is taking bold steps to position itself as an alternative in the electric vehicle supply chain.

The government has unveiled incentives of at least $3.4 billion to expedite its lagging adoption of EVs as Prime Minister Narendra Modi vows to reach net zero by 2070. The idea is that manufacturing the costliest component — batteries — locally will make the end product more affordable for the mass market and set the country up as a potential exporter, tapping into surging global demand.

The initiatives have piqued the interest of billionaires like Mukesh Ambani, whose Reliance Industries Ltd. is building an EV battery facility as part of a broader $76 billion push into clean energy. Ambani’s is among three companies, including scooter-maker Ola Electric Mobility Pvt. and bullion refiner Rajesh Exports Ltd. set to receive incentives under a $2.3 billion program to support advanced battery cell development.

With gigawatt-scale manufacturing facilities planned, India could carve out a role as an exporter of lithium-ion cells to European and American markets, said Rahul Prithiani, senior director for energy, sustainability and commodities at Crisil Ltd., the local analytics unit of S&P Global. “But for this, India needs to secure robust supply chains along with recycling capabilities,” he said.

And therein lies the biggest challenge to India’s EV ambitions. The world’s second most populous country has only a fraction of the raw materials needed to satisfy domestic demand for lithium-ion batteries — forecast by Crisil to grow 100 fold by 2030 — let alone produce on a global scale.

As the world moves away from gasoline-fueled combustion engines, demand for lithium, nickel, cobalt and other metals that go into lithium-ion batteries is soaring. BloombergNEF estimates that global appetite for the metals used in next-generation batteries increased 50% last year alone and will nearly quadruple by the end of the decade. Supplies are getting tight, and that’s already driving up costs.

“The entry barriers are quite high,” said Jasmeet Singh Kalsi, director of Manikaran Power Ltd., which is setting up India’s first lithium refinery and scouting for nickel, cobalt and copper assets overseas. “China has captured most of it.”

Manikaran could buy spodumene, a source of lithium, for $500 a ton in 2019. “Today,” said Kalsi, “the prices are around $5,000 a ton.”

China’s dominance in lithium extends through the supply chain; its companies already have agreements with major lithium-producing nations and a head-start in processing the raw material into battery-grade inputs as well as manufacturing the storage packs themselves.

India has a long way to go to catch up, and also faces competition from other countries, including the US, which is pushing to grow domestic battery production in an effort to break China’s hold on the market.

Indian companies are in trade talks to procure more of the material from countries like Australia, the source of roughly half the world’s lithium exports. State-backed Coal India Ltd., the country’s largest miner, said it also plans to extract more of the metals and minerals used in batteries, though few details have been released. India announced a small lithium discovery near Karnataka in 2021 and is planning to open up mining of key minerals to private companies, but will have to primarily look overseas.

Copper, another metal used in EVs, is also in focus. Hindalco Industries Ltd., India’s biggest producer of copper, estimates that demand is likely to more than double in the next 10 years — a particularly sensitive dynamic given the country’s increasing reliance on importing the metal.

India flipped to being a net importer of copper following the closure of Vedanta Ltd.’s 400,000 tons-a-year plant in 2018, which cut the country’s output by about 40%. To reverse that trend, billionaire Gautam Adani — Asia’s richest man and one of Ambani’s chief rivals — is building a 500,000 tons-a-year copper refinery in western India. His Adani Enterprises aims to start production by the first half of 2024.

Lithium and copper aren’t the only metals that are in short supply. India also lacks nickel, cobalt ore, graphite and manganese. In order to meet a projected domestic demand of 200 gigawatt hours of lithium-ion batteries by 2030, India will need about 35,000 tons of nickel sulphate and 11,000 tons of both manganese sulphate and cobalt sulphate, according to Crisil.

Global demand for the purest form of nickel will increase to 1.34 million tons by 2030 from 100,000 tons in 2019, according to forecasts from BloombergNEF, which conducts new energy research.

“While India has large manganese and graphite resources, production has yet to achieve scale,” said Komal Kareer, an analyst at BloombergNEF. “It remains an import-dependent market and that is unlikely to change in the next decade.”

That means making lithium-ion batteries won’t be cheap, hampering India’s plans to develop more affordable EV models that can be sold domestically and exported to lower-income countries.

It may not feel like it with Tesla Inc. making the front pages daily, but analysts stress that the green transition is still at a nascent stage and China’s head-start doesn’t mean it will remain ahead.

Countries around the world are already developing alternatives to lithium-ion batteries. With raw material prices soaring, interest in the potential of sodium-ion batteries has grown.

The materials needed for sodium-ion cells are abundant and cheap, though the technology has yet to match lithium-ion on energy storage, the key performance metric of a battery.

Reliance, in particular, is pushing to replace lithium with sodium, whose production costs are on par with traditional lead-acid batteries. In late 2021, Ambani’s company spent £100 million ($122 million) to acquire Faradion Ltd., a UK-based sodium-ion battery technology firm that claims to already be delivering 160-170 watt-hours per kilogram commercially — and expects to soon reach 200 watt-hours a kilogram. That puts it not far off the energy density offered by some lithium-based cells.

By comparison, CATL, a key Chinese developer of sodium-ion cells said in 2021 that its first-generation products would deliver 160 watt-hours per kilogram. If the technology takes off, India could be well-placed to compete.

“The material which is the prime material for many of the industries right now might not be the material in 10 years time,” said Chandra Bhushan, president of the New Delhi-based International Forum for Environment, Sustainability & Technology. “I’m not that pessimistic that the world will only be dependent on a few materials to drive industrialization.”

Georgia, Kentucky and Michigan are going to dominate electric vehicle battery manufacturing in the United States by 2030.

Each of those three states will be able to manufacture between 97 and 136 gigawatt hours’ worth of EV batteries per year by 2030, according to plans they have laid out.

Kansas, North Carolina, Ohio and Tennessee will also be key players, with planned capacity for between 46 and 97 gigawatt hours’ of EV battery production per year by 2030.

This planned manufacturing capacity was highlighted by the U.S. Department of Energy on Monday, based on a November 2022 report from the Argonne National Laboratory in November.

To keep up with increasing demand for EVs, the total build out of EV battery manufacturing capacity in North America will go from from 55 gigawatt-hours per year in 2021 to almost 1,000 gigawatt-hours per year by 2030. So far, the planned investment in these factories is more than $40 billion, according to an October report from the Federal Reserve Bank of Dallas.

By 2030, this EV battery manufacturing capacity will support the manufacturing of between 10 million and 13 million all-electric vehicles per year, putting the U.S. in position to be a global EV competitor.

“Growing battery manufacturing capacity by more than 15x by 2030 will put the U.S. in the leadership circle of the EV market,” Nick Nigro, founder of the public policy shop, Atlas Public Policy, told CNBC.

“This capacity will provide more than enough batteries for the U.S. to reach the Biden Administration’s goal of 50% EV sales by 2030,” Nigro told CNBC. The work Atlas does includes both transportation and climate policy.

The planned wave of EV battery manufacturing plants will be close to EV assembly facilities in North America, identified by red dots in the graphic.

“It really appears that they are trying to reduce their overall manufacturing costs here,” David Gohlke, one of the authors on the paper from Argonne, told CNBC. “They have these relatively heavy batteries that they need to ship from the assembled battery assembly location to their automotive assembly plant, and they need to make sure that they have the infrastructure around to do that.”

Virtually all of the planned plants in Argonne’s report will make lithium ion batteries and will be joint ventures between automakers and battery manufacturers like Panasonic, Samsung, LG Chem or SK Innovation, Gohlke told CNBC.

Going forward, it will also be important to train workers and ramp up the supply chains of necessary minerals, Nigro told CNBC.

“The big challenge for the industry will be establishing a reliable supply chain and building the human capacity to make these factories hum,” Nigro told CNBC.