June 30, 2023

Driving the Transition: The Need for Balancing Lithium Supply and the Rising Demand for Electric Vehicles

Electric vehicles (EVs) offer a promising solution to environmental issues, driving a widespread push for rapid electrification to combat carbon emissions. The need to mitigate the impacts of climate change has led to an urge towards the widespread adoption of EVs. Nevertheless, as we transition to this cleaner alternative, it is essential to acknowledge and address the challenges and costs that accompany this shift. One crucial component of electric vehicles is the lithium-ion battery, the same technology powering the device you’re using to read this article. The growing demand for electric vehicles could potentially lead to a shortage of lithium, a key resource of such batteries. This presents a significant obstacle in the electric vehicle revolution and raises an important question:

Can enough lithium be produced to meet the demand for an all-electric vehicle fleet?

In this blog post, we will explore this issue by considering hypothetical scenarios and comparing them to what is currently expected to happen in the future toward EV adoption. We will examine whether lithium production can keep pace with the demand in such cases. These main scenarios are as follows:

1. Base Scenario: The composition of market sales of vehicle technologies is similar to the reference projection values published by Annual Energy Outlook (AEO).
2. Aggressive BEV mandate: The composition of market sales will change from AEO reference with an aggressive mandate for a complete transition to battery electric vehicles (BEV) by 2030, with AEO baseline assumptions about the source of electricity generation.
3. Aggressive BEV mandate w/ clean electricity: The composition of market sales will change from AEO reference with an aggressive mandate for a complete transition to battery electric vehicles (BEV) by 2030, with an electricity mix containing more renewable energy.
4. Aggressive PHEV mandate followed by BEV transition: The composition of market sales will change from AEO reference with a mandate for plug-in hybrid electric vehicles (PHEVs) by 2030 followed by a transition to BEVs by 2050, with an electricity mix containing more renewable energy.

The aim of defining these scenarios is to assess the feasibility of transitioning the entire vehicle market to 300-mile battery electric vehicles (BEVs) by 2030 and see whether the transition to BEVs would become smoother if preceded by a shift to plug-in hybrid electric vehicles (PHEVs) first. For the purpose of simplicity, the main focus of this transition is on light duty vehicles (LDVs) which comprise cars and light trucks.

The main tool of the analysis was the VISION model, developed by the US Department of Energy (DOE). This model is a valuable tool for estimating the potential impacts of advanced vehicle technologies and alternative fuels on energy use, oil consumption, and carbon emissions. Designed in Microsoft Excel, this model serves multiple purposes, allowing for both quick-turnaround analyses and longer-term projections. By incorporating factors such as vehicle survival rates, age-dependent usage patterns, and exogenously developed assumptions on market penetration and vehicle energy efficiency, VISION generates projections for various metrics. These include the total stock of light- and heavy-duty trucks, total vehicle miles traveled (VMT), and total energy consumption based on different technologies and fuel types.

Additionally, VISION estimates total carbon emissions from on-highway vehicles over time by incorporating life-cycle carbon coefficients for various fuels. This provides a comprehensive understanding of the environmental impacts associated with different vehicle technologies and fuels. By changing the market penetration shares and main energy source for electricity, the amount of carbon emission and the number of vehicles can be predicted for each of the scenarios in this blog post.

In the Base scenario (a) which is a projected trend of EV adoption provided by AEO, a gradual transition in the market towards EVs is assumed up until the year 2100, where the share of conventional vehicles decreases to nearly 65% from its value in 2020, 85%. In the Second and Third (b, c) Scenarios we assume that 100% of market sales would become BEVs with 300 miles plus range. In One of these scenarios (b) sources of energy are predicted by AEO, whereas the other one (c) considers a high-renewables electricity mix. By interpolating the market shares for the year 2024, it is assumed that the market penetration will deviate from the 2024 values to meet the full transition to BEVs with 300 miles plus range by 2030. In the last scenario (d) first, a transition to a 90% market sale share for PHEVs with 40 miles range of all-electric by 2030 is experienced, followed by a transition towards BEVs with 300 miles plus range by 2050 using high renewables electricity mix. In order to comprehend the impact of each scenario on the demand for lithium extraction, we must begin by addressing an important question:

How much Lithium is used in different types of Electric Vehicles?

The amount of lithium required depends on the number of EVs and the lithium content in their batteries. The lithium content is closely tied to battery capacity, which refers to the amount of electrical energy stored in an EV’s battery pack and is usually measured in kilowatt-hours (kWh). This capacity plays a vital role in determining the driving range of the vehicle. Simply put, the higher the capacity, the longer you can travel on a single charge.

Table 1 presents the battery capacity of different EV and PHEV models available in 2023. Based on the values represented in Table 1, for an average new EV car with a range of over 300 miles, a battery capacity of 80 kWh is considered, taking into account vehicles like the Hyundai IONIC and the Tesla Model Y, which represent affordable and popular options respectively. Also, for light trucks, it is assumed an average battery capacity of 140 kWh, considering upcoming models like the Tesla Cybertruck and Chevy Silverado with anticipated higher capacities.

Table 1. Range and battery capacity of EV and PHEV models in the US market

BEVs with 300+ mile range
Car	Range (miles)	Battery Capacity (KWh)
2023 Lucid Air	516	118
2023 Tesla Model S	415	100
2023 Tesla Model 3	358	82
2023 Mercedes-Benz EQS	350	108
2023 Tesla Model X	348	100
2023 Tesla Model Y	330	81
2023 Kia EV6	310	77.4
2023 Hyundai Ioniq 5	303	77.4
2023 BMW i4	301	84
BEVs with 300+ mile range (light trucks)
Chevy Silverado EV	400	200
GMC Sierra EV	400	200
Ram 1500 Revolution	350	168
Tesla Cybertruck	300 to 400	200
GMC Hummer EV	329	213
Ford F-150 Lightning	320	131
Rivian R1T	328	135
BMW Ix	324	112
Mercedes-Benz EQS SUV	305	120
2023 Nissan Ariya	304	90
2023 Ford Mustang Mach-E	312	91
EVs with 100 to 200 miles range
Renault Zoe ZE50 R110	<200	52
Opel Astra Electric		51
EVs with 100 to 200 miles range (light trucks)
Toyota bZ4X AWD	<200	64
Subaru Solterra AWD		64
EVs with less than 100 miles range
Smart EQ fortwo coupe	<100	16.7
Dacia Spring Electric 65 Extreme	<100	25
Renault Twingo Electric	<100	21.3
EVs with less than 100 miles range (light trucks)
Fiat 500e Hatchback 24 kWh	<100	24
PHEVs with 40+ miles all electric range
Toyota Prius Prime	40	13.6
2023 Volvo V60 Recharge	41	18.8
2023 Volvo S60 Recharge	41	18.8
2023 Mercedes‑Benz S580e L	62	28.6
PHEVs with 40+ miles all electric range (light trucks)
TOYOTA RAV4 PRIME	42	18.1
PHEVs with < 40 miles all electric range
2023 Subaru Crosstrek	<20	8.8
2023 MINI Countryman	<20	9
2023 BMW 3 Series	20	12

Although an exact figure for the lithium content in EV batteries is not readily available, we can rely on the findings of a thorough review conducted by Paul Martin. According to his research, approximately 160 grams of lithium is necessary per kilowatt-hour (kWh) of battery capacity. However, when factoring in a 70% recovery rate during the refining process, this estimate increases to 230 grams. Based on these numbers, the corresponding amount of lithium needed for each average capacity is also presented in Table 2.

Table 2. Battery capacity and lithium contents for average EVs and PHEVs in the US market

EVs with 300+ mile range	Auto	Light trucks
average battery capacity	80	140
Lithium content (kg)	12.8	22.4
Lithium recovered from earth	18.4	32.2
lithium carbonate equivalent (LCE)*	68	119
EVs 100-200 mile range	Auto	Light trucks
average battery capacity	52	64
Lithium content (kg)	8.32	10.24
Lithium recovered from earth	11.96	14.72
lithium carbonate equivalent (LCE)	44.2	54.4
EVs with < 100 miles range	Auto	Light trucks
average battery capacity	20	25
Lithium content (kg)	3.2	4
Lithium recovered from earth	4.6	5.75
lithium carbonate equivalent (LCE)	17	21.25
PHEV with 40+ mile range	Auto	Light truck
average battery capacity	15	18
Lithium content (kg)	2.4	2.88
Lithium recovered from earth	3.45	4.14
lithium carbonate equivalent (LCE)	12.75	15.3
PHEV with < 40 miles range	Auto	Light trucks
average battery capacity	10	10
Lithium content (kg)	1.6	1.6
Lithium recovered from earth	2.3	2.3
lithium carbonate equivalent (LCE)	8.5	8.5

Now that the amount of lithium used in each type of electric vehicle is determined, we can estimate total embedded lithium in the system up until 2100, as well as the total demand for lithium by an increase in the fleet:

How much lithium would be contained in the US light duty vehicle fleet? How much would this increase each year?

Using the projections generated in VISION, the number of vehicles of different types in each scenario until 2100 is calculated. Some of the results for 300-miles BEVs, and 40-miles PHEVS are illustrated in Figure 1. By using these projections and the average values of lithium content in EVs (refer to Table 2), the total amount of lithium contained in the fleet and the net addition of lithium required at each year from 2020 to 2100 are illustrated in Figures 2 and 3 respectively.

 

Figure 2 shows the total amount of lithium in the system at each year by multiplying the number of active electric vehicles by their lithium content needed. These vehicles include EV type A (100-miles range), B (200 miles-range) and C (above 300-miles range) as well as different types of PHEVs with less than or equal to 20 miles CD range assumed to operate in blended mode, and those with greater than 20 miles CD range having an ability to operate all electrically during CD operation.

Figure 3 also illustrates the estimated demand for lithium over time by subtracting the amount of lithium content in consecutive years. It should be noted that this is based on the assumption that once lithium has been extracted and put into an automotive battery, it remains in the automotive system, e.g. by recycling at end of life, so subtracting the consecutive values provides the net demand for additional lithium. By examining the plotted data and comparing it to the global amount of lithium production, we can gain insights into the potential challenges and requirements associated with lithium extraction to support the growing demand for electric vehicles. The crucial question that now arises is whether there is enough lithium to meet this anticipated demand.

How much Lithium will be globally available?

To answer this question, we will look into the global supply of lithium and provide a rough estimation of projected future lithium production up until 2100. (It is important to note that these calculations and projections are based on hypothetical assumptions and are intended to provide a general understanding of the lithium requirements for different scenarios. Actual figures may vary based on real-world factors and evolving technological advancements.)

The Earth holds an estimated total of approximately 88 million tonnes of lithium. However, only a quarter of this amount is economically viable to extract as reserves. Therefore, the accessible lithium resources amount to around 22 million tonnes. Despite this substantial reserve, the lithium industry faces challenges in keeping up with the growing demand. One major obstacle is the concentration of lithium resources in a few geographical locations. Presently, over half of global lithium production occurs in areas with high water stress.

The extraction process for lithium necessitates significant volumes of water, often amounting to many thousands of gallons per minute. As reported by The New York Times, this high water demand has resulted in issues surrounding water stress, where the available water resources in a region are insufficient to meet its needs. Moreover, there are concerns regarding groundwater contamination with substances such as antimony and arsenic, posing persistent threats in lithium mining operations.

The environmental impact of lithium mines extends beyond water-related issues, encompassing biodiversity loss, soil erosion, and degradation of air quality. These factors alone do not even account for the potential consequences associated with moving mining operations to the ocean floor. Considering these challenges, a significant increase in lithium production is not easily achievable. Constructing new mines also would not be easy. Analysis of major mines that became operational between 2010 and 2019 reveals that, on average, it took 16.5 years to develop projects from the initial discovery to the commencement of production (source: The Role of Critical Minerals in Clean Energy Transitions). The exact duration varies depending on the specific mineral, location, and type of mine. Exploration and feasibility studies alone took over 12 years on average, followed by an additional 4-5 years for the construction phase. These extended lead times raise questions regarding the supply’s ability to ramp up output quickly in response to a sudden surge in demand. This limited capacity of current mining sites and the time required for new projects to come online will decrease the ability to meet the rapidly increasing demand for lithium. It is crucial to address these challenges through careful planning, investment in sustainable mining practices, and exploring alternative sources of lithium to ensure a stable and responsible supply chain for the future.

Based on an analysis of historical lithium supply trends and projections from various sources including BloombergNEF, S&P global, Institutional investor, and Statistica, we have developed a projection extending up to 2100 (Figure 4). According to the statistical review of world energy, there is a substantial growth rate between 2011 and 2020, which was primarily driven by the sudden increase in demand resulting from the market acceptance of electric vehicles (EVs). This trend is illustrated in Table 3 below.

Table 3. Global lithium production. Source: BP Statistical Review of World Energy.

To adequately meet the rising demand for electrification in the next decade (2021-2030), our projection optimistically assumes that this robust growth rate from 2011 to 2020, will continue until 2030. However, as depicted in Figure 4, we anticipate a gradual decrease in the supply growth rate beyond 2030. This adjustment is motivated by two key factors:

1. Firstly, the mentioned limitations and challenges associated with lithium supply facilities, particularly in terms of their environmental impact and strain on water supplies can potentially limit the supplies in the near future. As sustainability concerns come to the forefront, there will be a need to address these issues and ensure responsible practices in lithium extraction, which in certain cases could lead to extractions reductions or even closure of a mining facility.
2. Additionally, as production expands, the extraction of the remaining lithium resources is expected to become increasingly challenging. By considering these factors, our projection seeks to provide a realistic outlook that acknowledges both the immediate surge in demand due to the popularity of EVs and the potential constraints and obstacles that may affect lithium supply in the long term.

How does the EV demand compare with the worldwide rate of Lithium production?

When comparing the projected lithium demand in our scenarios with anticipated supplies (Figure 5), we observe that in the scenarios b and c, the supply is expected to slightly lag behind the demand by 2030. However, in the last scenario, the supply appears to be able to meet the demand.

It’s important to note that the supply mentioned here refers to worldwide supply, while the demand analysis focuses solely on the United States and specifically for light-duty vehicle electrification. Considering the broader context of global demand and the inclusion of heavy-duty vehicles, the overall demand for lithium is likely to increase significantly. To simplify the analysis, we consider Europe, China, and the United States as the primary countries adopting EVs. Referring to Figure 6, the share of EV sales in the United States as a percentage of total vehicle sales was around only 15% as of December 2021. So, reaching a very rapid electrification goal simultaneously in other parts of the world would not be feasible considering that demand would be roughly 6 times that of the US alone.

Taking into account the battery capacities reported by Liimatainen et al. (2019), we assume that the average battery capacity for medium and heavy-duty vehicles is 400 kWh, which is five times that of a light-duty vehicle’s average capacity of 80 kWh. If we consider medium and heavy-duty vehicles comprising approximately 4% of the total vehicle fleet, the electrification of these vehicles would require 20% of the lithium needed for light-duty vehicle electrification alone.

Based on these rough estimations, if we scale up the 2030 scenario to include medium and heavy-duty vehicles, the demand for lithium would be approximately 20% higher than the previous estimate. Considering the complexity of the global market and the varying demands across different countries and vehicle types, it is crucial to recognize that these estimations serve as rough approximations. However, they highlight the potential increase in lithium demand when considering the electrification of medium and heavy-duty vehicles alongside light-duty vehicles.

Finally: Is a gradual transition from PHEV to all-BEVs (Scenario d) better than the immediate transition to BEVs with high renewables mix (Scenario c)?

The short answer is yes. As derived from the VISION output data, the predicted GHG emissions for when a gradual transition from PHEV to BEV happens is only slightly worse during years of 2040 to 2060, and is the same in nearly all other periods (Figure 7). On the other hand, as depicted earlier in figure 5, the net additional lithium demand caused by the transition in scenario d puts a lot less stress on the lithium supply. Thus, it appears that a gradual transition towards all BEV scenario is a more reasonable decision, providing a balance between the growing lithium demand and the rate of lithium supply production in the world.