This article focuses on three key measures for preventing or responding to EV battery shortages: industrialization and scale-up of gigafactories, strategies to find and retain talent, and establishment of a robust and efficient supply chain.
Two factors are behind the expected shortfall. First, the amount of lithium extracted from deposits around the world is projected to fall well short of demand. Second, the capacity for refining the mineral into the chemicals used in lithium-ion batteries is heavily concentrated in a handful of countries.
Recycling could solve that problem, and also help fill some of the world’s looming shortage of battery materials. Straubel founded Redwood in 2017 while still at Tesla, and hired a small team to quietly work on that challenge.
But it seems that, in our rush to escape the use of carbon fuels, we have replaced one scarce resource for another, with Tesla reporting that they believe global shortages of these vital battery components are on the way. Why are these minerals in short supply?
All aspects of the battery value chain are expected to grow rapidly through 2030, with cell production and material extraction being the largest markets (Exhibit 2). That growth will likely create ongoing supply chain challenges.
In fact, the battery supply chain risks facing a situation similar to the current semiconductor chip shortage, where demand growth has outstripped capital investment in new supply. Furthermore, environmental, social, and governance (ESG) factors will play a more significant role—raising another set of issues that companies need to address.