Lithium refineries may struggle to meet demand for electric car batteries, tax report says

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The demand for lithium-ion battery cells is about to skyrocket. Driven by stricter emissions standards, automakers are expected to increase production of electric cars over the next few decades. Non-automotive uses such as consumer electronics and energy storage will increase the demand for the element. But can lithium processors handle it? That’s the billion dollar question.

Lithium is readily available, but making sure there is enough capacity to turn it into something useful is another matter, according to Reuters. Automakers and other companies that use lithium-ion batteries must sign large multi-year agreements with their suppliers to get them to make the necessary investments in production capacity, according to the press service.

The lithium that goes into batteries usually comes from two types of deposits: hard rock and brine. But extracting and refining either of these sources of usable material can take years, and research companies are already anticipating lithium shortages unless processing capacity is increased.

Consulting firm Roskill predicts a shortage of 26,000 tonnes of lithium carbonate equivalent (an industry metric for major types of processed lithium) by 2025. By contrast, supply has exceeded demand for about 10,000 tonnes this year, according to Roskill. Major lithium processors are poised to expand to meet demand, but want commitments from customers in the form of long-term contracts, according to Reuters.

For the current style of electric vehicles to be successful, lithium must not only be readily available, but also be available in sufficient quantities to make it inexpensive. The price of lithium-ion battery cells has been a major obstacle to the large-scale production of electric cars, as it tends to make them more expensive than gasoline or diesel cars. Economies of scale could lower prices and open the floodgates for electric car sales … but only if lithium processors don’t create a bottleneck.


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