One of the key materials used in electric car batteries is cobalt. But there are growing concerns that the supply of cobalt is getting scarce as more and more automakers begin building electric cars.
A new report from Bloomberg New Energy Finance says cobalt shortages are expected to happen earlier than previously forecast. This issue possibly brings a big challenge to the rollout of electric vehicles over the next five to seven years.
"The long lead time to bring on new mines and the concentration of cobalt reserves in the Democratic Republic of the Congo mean there is a real possibility of supply shocks in the early 2020s," analysts from BNEF wrote.
"If capacity does not grow as planned, cobalt prices could continue to spike and there could be a major cobalt shortage. This would have serious implications on the electric vehicle market."
The price of cobalt has tripled within the past two years as more automakers begin building electric vehicles. Peter Deneen, the managing director at consultancy EV-Metals Resources Group said in an email that the market price for cobalt has risen in the "prospect of supply constraints". But the price doesn't include the potential risk of political upheaval in the Democratic Republic of the Congo - accounts for more than two-thirds of mined cobalt.
Concerns have automakers accelerating development of batteries that have smaller amounts of cobalt. Chinese automaker BYD is expected to introduce batteries that have a nickel-manganese-cobalt ratio of 8:1:1 by the end of this year. BMW is expected to follow in 2021 with a similar ratio. According to BNEF's report, this chemistry will account for 57 percent of EV batteries by 2030.
There is also the idea of recycling batteries that could provide 100,000 metric tons of cobalt a year by 2030. But the amount would have to mean all batteries from consumer electronics are recycled. Currently, the recycling rates around between 25 to 50 percent according to the report.
Source: Bloomberg via Automotive News (Subscription Required)