- EV sales are predicted to increase sixfold by 2030
- Demand for EVs and battery materials, accounts for 95% of lithium supply
- Reusing, recycling, and other chemicals can take pressure off supply chains
An increase in global demand for electric vehicles is likely raw materials tax goods at the end of the decade, according to a new analysis from McKinsey & Company.
The company estimates that EV sales will increase sixfoldfrom an estimated 4.5 million vehicles worldwide in 2021 to 28 million in 2030. But analysts believe that raw material producers may have trouble keeping up with this growing demand.
For example, while McKinsey expects an increase in lithium supply from the widespread adoption of direct mining technology, that will be accompanied by an increase in demand from battery suppliers. They account for 80% of global lithium use today but that could grow to 95% by 2030, McKinsey estimates.
A stack of Rivian battery cells
If demand for NMC-chemistry EV batteries continues to grow, as McKinsey expects, that could also cause a shortage of nickel despite the expected increase in mining for that metal. in this case, the battery industry competes with the steel industry (which uses nickel to make stainless steel), and both sectors are expected to consume more nickel by the end of the decade, McKinsey notes.
That's assuming NMC continues as an outstanding chemist. McKinsey acknowledges the increased interest in LFP chemistry, and notes that increased production of LFP battery cells could change the supply situation.
So is the investment in additional sources of raw materials as part of efforts by the European Union and the US to increase domestic battery production. Although the final policies may be changed by the incoming Trump Administration, it has abandoned what would be a cost advantage over China in battery production.
Rivian Gen 2 battery pack
Several companies are also looking reuse and recycling of battery materialsand other chemistries beyond LFP, may start operating on a small scale before the end of the decade, possibly taking some of the pressure off the supply of raw materials.
The analysis that paints a positive picture of battery demand—and perhaps those seeking investment—may come as no surprise to those familiar with McKinsey's work. Goldman Sachs, on the other hand, reported in November that EV battery prices could drop by 50% by 2026 in part because decreases prices of raw materials such as lithium and cobalt. So even among the biggest names in analysis and forecasting, there are very different views on what direction the future might take.