The battery shortage could derail the EV industry’s lofty goals

The EV battery shortage is about to hurt more than pinching your finger in a car door.

RJ Scaringe, CEO of EV startup Rivian, told reporters on a tour of the company’s Illinois plant last week that the recent semiconductor shortage hampering the auto industry is just a “small appetizer to what we are about to feel on battery cells over the next two decades.” And with EV manufacturers’ lofty production goals, every part of the supply chain is struggling to keep up.

The biggest hiccup starts at the very beginning

We’re talking raw materials. 80% of the cost of a lithium-ion battery comes from raw materials including lithium (duh), cobalt, and nickel. But as companies scramble to snag those supplies, prices have skyrocketed. The price of lithium alone has gone up over 480% in the last year, according to Benchmark Mineral Intelligence.

• Tesla CEO Elon Musk said lithium battery prices were so “insane” he might just get into mining himself. You and us both, buddy.
• And because lithium-ion batteries account for at least 30% of the cost of an EV, higher battery prices are translating to higher prices for consumers. Both Rivian and Tesla have hiked prices recently, saying expensive raw materials are partly to blame.

And those materials are not Made in the USA

In 2020, the US imported over half of its supply of 46 minerals and all its supply of 17, according to the US Geological Survey. One of the biggest suppliers is China—the world leader in lithium-ion battery manufacturing—which has a history of restricting trade for political reasons.

That’s enough to spook the White House, which considers the EV supply chain to be a national security issue. Last month, President Biden invoked the Defense Production Act, which gives the government access to $750 million to invest in domestic mining operations for critical raw materials needed by battery manufacturers. But it could take up to a decade to see new US mining projects or battery plants.

Zoom out: President Biden’s goal is for half of all new cars sold by 2030 to be electric. But given the shortage of materials, that’s like asking MasterChef contestants to make a meal with two footballs and a single noodle. According to Rivian’s Scaringe, “90% to 95% of the supply chain does not exist.”—MM

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