The B2B platform for full-electric and plug-in hybrid electric vehicles: Industry News

Car manufacturers rush to close deals with lithium suppliers and to secure access to a resource that is as common as lead or nickel. The supply chain of lithium is fragile due to unreliable lithium miners and suppliers.

Global automakers and battery makers need to ensure a steady supply of lithium to power the expected electric-car revolution. Sources for the mineral are well spotted in Chile, Bolivia, Argentina, Australia and China and not scarce, however, few are reliable miners and suppliers. The currently biggest producers of Lithium are Chile’s SQM, the German Chemetall, a division of U.S. Rockwood Holdings Inc., and U.S. FMC Corp.. However, the political stability of at least the first two supplier countries is less than stable.

Is lithium the new oil?

Considering some of the problems inherent to lithium supply, one might be tempted to equate the problematic with that of oil supply, especially as some have already raised the spectre of seeing emerge an equivalent to the OPEC composed of lithium producing countries.

However, there are many reasons why lithium supply will not cause the same problems as did oil supply:

• Only a small part of the costs of a lithium-ion battery are actually caused by the lithium contained in the battery, the most expensive parts being the complicated cathodes and anodes. To give one example: the lithium used for one Chevy Volt sums up to $180 while the total cost of the battery turns around $10,000.
• Lithium is not a scarce resource. Currently, only large and easy accessible sources are exploited, but if prices were to rise multiple other economically viable lithium deposits could be mined.
• Lithium is not consumed in the car, meaning it could be recycled after the car is discarded. For the moment, however, lithium is too cheap to make recycling economically interesting.
• Fluctuating lithium prices can only impact on the purchase price of the car, not on the running costs as does oil.
• Technologies advance and alternative to lithium-ion batteries do exist (zinc-air, metal-air batteries).

Strategic resource

Nonetheless, the efforts of carmakers to secure deals with suppliers underline that lithium is a strategic resource. Toyota Tsusho Corp., the sister company of Toyota Motor Corp., has recently forged a joint venture to develop a lithium deposit in Argentina in partnership with Australia’s Orocobre Ltd. Partnerships like this are aimed at controlling the supply chain, introducing more players and increasing competition with the goal of lowering the price of lithium for those who expect sizeable demand in the future.