EV and battery big talk must now switch to mining as supply chain bites

By Simon Moores and Morgan Bazilian

The lithium ion battery is in the midst of its transition from niche industry to mainstream platform technology for the 21st century.

The coming of age of electric vehicles has seen demand for these batteries surge from 59 gigawatt-hours (GWh) in 2015 to 400 GWh in 2021. This is forecast to grow by a significant 50% to 600 GWh in 2022, according to analysis by Benchmark Mineral Intelligence.

This sheer scale of battery output has been made possible through the rise of so called gigafactories, battery plants an order of magnitude bigger than their predecessors.

Sparked by Elon Musk’s first Tesla Gigafactory in Nevada in 2017, the rest of the world has now followed in building super-sized battery plants.

From 3 such plants in 2015, we now have 285 gigafactories globally at various stages of planning and construction.

This has allowed output to increase exponentially and costs to fall significantly from $280/kWh in 2015 to $115/kWh.

However, for the last few years these cell costs have been flatlining and last year experienced their first increase in this giga-era.

Why? Because the critical raw material inputs have been neglected.

Neglect at your peril

In 2015, 40% of the cost of a lithium ion battery was raw materials, the critical minerals that get transformed into chemicals to make a battery’s main components, the cathodes and anodes.

At less than half of the cost of the whole battery, cathode and anode raw materials were deemed not worthy of priority attention.

In 2022, the dynamics have shifted: raw materials now account for upwards of 80% of the cost of a lithium ion battery.

Therefore, if EVs mean lithium ion batteries, EVs must now mean critical minerals and mining.

As a result of surging EV battery demand and a lack of new supply, pressure on the critical minerals that fuel lithium ion battery production have been increasing.

Since January 2020, Benchmark’s lithium prices have increased by over 700%, nickel by 250%, cobalt and manganese by 100%, and graphite by over 25%.

And right now, there is not enough of these raw materials in the pipeline to take the majority of EV makers beyond 2030.

While upwards of $500bn has flowed into building the 285 gigafactories around the world – and $150bn last year alone – critical mineral mines and mid stream processing plants have not seen anywhere like this type of investment.

The great raw material disconnect

This great EV raw material disconnect has OEMs, the ultimate end users of these battery cells, concerned.

An industry that is used to dominating a supply chain is suddenly coming to the realisation that it has to build these new energy supply chains from scratch after the capital markets failure to step up.

It’s a similar realisation that automakers had around 2018 when they were forced to get involved in battery cell making.

A handful of EV makers are taking the supply chain strategy a few steps further but the examples are isolated.

Tesla wants to build its own cathode, nickel chemical and lithium hydroxide plants in Austin, Texas, feeding its new 4680 battery cell factory.

VW announced only a few weeks ago that it wants to begin nickel and cobalt refining in China.

General Motors has committed $400m to build cathode material in Canada.

But to have the ultimate sway of industrial power you need to own the mines, in part or in full.

This is the only way to guarantee the raw material to make your batteries and EVs.

Echoes of Henry Ford

OEMs are right to be fearful and hesitant to want to “become miners”.

Echoes of an ill-fated venture by Henry Ford to build rubber plantations in Brazil in the 1920s after the industry ran out of rubber tyres loom large.

One hundred years on the industry faces an eerily similar problem.

The reality is that this global EV blueprint is yet to be built out to a scale needed to reach surging consumer demand and increasing aggressive OEM and government targets… We are nowhere close.

Critical mineral mines will need to be built, existing mines expanded, stockpiles and waste heaps revisited, and battery recycling needed.

The significance of the situation is not lost on global leaders.

Only last week, The White House enacted the Defense Production Act Title III to zero in on domestic battery minerals production of lithium, cobalt, nickel, graphite and manganese.

The most recent DPA determination focused on the covid pandemic and it had previously been used for metals during times of war.

This clearly shows the US government becoming actively involved in investing in its domestic battery raw materials production both via co-production and to help fund bankable feasibility studies for exploration stage miners – a major bottleneck for institutional money.

This is a major step forward for US production of critical battery minerals and a move that it hopes will drag the finance community into 21st century mining.

Big talk on EVs must now mean equally as big statements on mining.

After all, a gigafactory without secure raw materials is as useful to an OEM as a grain silo.

Simon Moores is CEO of Benchmark Mineral Intelligence and Morgan Bazilian is Director of the Payne Institute and Professor of Public Policy at Colorado School of Mines.


Benchmark will be hosting its Battery Gigafactories USA 2022 in Washington DC, Thursday 23-24 June.

It brings together government, industry and financiers of the electric vehicle revolution with a specific focus on the rise of these supersized lithium ion battery plants in the USA.

Register to attend here.

To speak or sponsor contact Ben Ash ([email protected]) or Craig Middleton ([email protected]).