What are the Problems in the EV Battery Supply Chain and How Can we Improve it?

  • As demand for electric vehicles (EVs) continues to grow, many are concerned that we won’t be able to produce enough batteries to power these EVs.
  • This concern stems from problems in today’s EV battery supply chain.
  • While the article discusses the challenge from a USA perspective, the same challenge applies globally for all countries.  

The term “supply chain” describes the process by which a product is made and delivered to a consumer. Problems in the EV battery supply chain can slow EV production, create higher costs, and ultimately slow adoption of this critical technology. To electrify transportation, this supply chain needs to be robust, sustainable, and affordable.

This article describes the EV battery supply chain, its current challenges, and work underway to improve it. If you’d like to learn about what goes into an EV battery and how they work, check out the first article in the series: Clean Energy 101: Electric Vehicle Batteries.

The steps in the EV battery supply chain

The steps involved in producing and using an EV battery fall into four general categories:

  • Upstream: Mines extract raw materials such as lithium, cobalt, manganese, nickel, and graphite.
  • Midstream: Refiners and processors purify the raw materials to create minerals that are ready for use in technology.
  • Downstream: Battery manufacturers assemble the batteries and sell them to automakers, who place them in EVs. Some automakers like Ford and Stellantis have formed partnerships with battery manufacturers to produce their own batteries for the vehicles they sell.
  • End of Life: When batteries no longer serve their original purpose, they can be reused or recycled.
EV battery supply chain challenges

To keep up with demand for EVs, policymakers and the public and private sectors need to answer the following questions:

Where will we get the raw materials for EV batteries?

There are likely sufficient reserves of minerals in the earth’s crust to satisfy future demand for EV batteries but scaling up mining is a lengthy, expensive process. Also, mining often negatively affects the environment, public health, and human rights (more on this below).

There’s also some concern that we won’t build and open mines fast enough to keep up with demand. Fortunately, recycling and reusing batteries, practices that are expected to grow in the next decade, can help offset the need to mine new raw materials.

How will we protect human rights and local environments?

Around the world, mining is linked to human rights abuses, such as the use of child and forced labor. Many mines lack basic worker safety measures — endangering workers’ lives — and extraction often comes with an environmental cost. Mining practices often cause surface and groundwater depletion, soil contamination, biodiversity loss, and other negative consequences that can last for centuries.

How can we better monitor the EV battery supply chain to ensure that local communities and ecosystems are protected?

Today, few automakers and battery manufacturers know where their battery minerals come from and how they’re extracted (although that can be remedied with more investment). As a result, human rights abuses and environmental damages often go undetected. A growing coalition of stakeholders are working on these issues, including activists and advocates, policymakers, regulators, those in the automotive industry, and others. Many in the extractive industry have also expressed a desire to address these issues. These strategies are wide-ranging:

  • “Battery passports” are expected to improve supply chain transparency. These passports, when adopted, may help manufacturers certify where battery minerals are sourced and verify that these sources are following globally recognized ethical practices.
  • Public/private partnerships and assurance processes are also proving to be powerful tools. Organizations like the Initiative for Responsible Mining Assurance bring together industry, affected communities, governments, and others to provide an independent third-party verification and certification against a comprehensive standard for all mined materials. This process provides “one-stop coverage” of the full range of issues related to the impacts of industrial-scale mines.
  • Automakers are making commitments to ensure that the materials they use are ethically sourced.
Can we increase the resilience of the supply chain?

The EV battery value chain is dispersed around the world — battery minerals travel an average of 50,000 miles from extraction to battery cell production. At the same time, much of the mineral supply is concentrated in just a few countries. These factors make the supply chain more vulnerable to disruptions such as changes in alliances and trade agreements, wars and conflicts, new international regulations, and natural disasters. By strengthening our partnerships with other countries, improving regulations, devoting more resources to domestic battery production, and increasing battery circularity, we can strengthen the supply chain to make it more resilient.

EV battery supply chain disruptions

Even the best-run supply chains encounter bottlenecks from time to time. These include:

  • Extreme weather (e.g., hurricanes, tornadoes, and earthquakes that impact energy inputs and disrupt infrastructure like pipelines and shipping routes)
  • Geopolitics (e.g., the war between Russia and Ukraine)
  • Changing trade alliances between countries or regions
  • Corporate consolidation: Today, when one of the many companies involved in the battery supply chain experiences a disruption, others are affected. As EV demand rises, it’s likely that there will be a few big players that will oversee more parts of the process. Thus, if one (or more) of these companies experience disruptions, the effects will be greater.
  • A change in materials needed due to new technologies: Battery chemistries and designs are changing quickly; many of them use alternative and more abundant materials. These changes will affect the supply chain network and the countries and companies involved.

We need a robust EV battery supply chain in order to respond effectively to disruptions.

Current efforts to strengthen EV battery supply chains in the US

The US government is investing in strengthening EV battery supply chains using a variety of legislative tools:

The Infrastructure Investment and Jobs Act (IIJA)

Passed in November 2021, the IIJA provides funding for the programs and initiatives listed below, which are designed to address the above issues.

The CHIPS and Science Act

Passed in August 2022, the CHIPS and Science Act will fund American semiconductor research, development, and production, which will help decrease our reliance on China for the semiconductors used in EVs and many other technologies. Two programs will fund research and development in advanced manufacturing and materials with a total of $2 billion.

The Inflation Reduction Act (IRA)

Passed in August 2022, the IRA focuses on improving clean energy manufacturing and recycling; industrial decarbonization; critical materials processing, refining, and recycling; incentivizing domestic production; improving supply chains; and electrifying heavy-duty vehicles. The Act:

Understanding how the EV battery supply chain works and the challenges it faces will help us make effective policies to improve it and reduce the harms associated with it.

Author: Alessandra R. Carreon

This article was originally published by the RMI and is republished with permission through the Creative Commons CC BY-SA 4.0 license.

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