A Stalling Electric Car Revolution: Understanding Supply Shortages
In 2012 only 120,000 new electric vehicles (EVs) were sold worldwide. Now, a decade later, global EV sales exceed this figure on a weekly basis [1].
The UK’s Shift to Electric Vehicles
In total, there are over 570,000 EVs registered in the UK today. During 2021, this number was 400,000 – a growth of 92% from the previous year [2].
A continued shift away from fossil fuel vehicles towards EVs is necessary for the UK to meet the 2050 carbon neutrality goal. With the 2030 petrol and diesel car ban looming, there remain significant challenges to meeting EV adoption targets. Growing consumer demand is dependent on addressing major issues such as supply-side constraints on new vehicle production and improving battery lifespans.
The incentives for consumer adoption of EVs are various and growing. The cost of charging an EV is typically lower than its petrol or diesel equivalent. Consumers of zero-emission EVs (BEVs) do not pay road tax. And of course, EVs produce fewer air pollutants than their fuel-powered counterparts, significantly reducing the environmental impact of travel [3].
Growing Concerns About EV Uptake
Whilst demand for EVs is rapidly increasing amongst British consumers, EVs still account for a minority of vehicles on the roads at around 2-3% [4]. Even the most affordable EVs fail to compete on price with their more established counterparts with internal combustion engines. The current lowest market price for a new EV is £15,000, which is 57% higher than its fossil fuel-based equivalent [5]. Although the average price of EVs is expected to drop in the UK, it seems unlikely that price parity with petrol or diesel vehicles will be reached until 2025 at the earliest [6].
Source: ARK Investment Management LLC, 2020. Figures for the total cost of ownership, an estimation of the expenses associated with purchasing, deploying, using and retiring a vehicle
The UK’s uptake of EVs remains worryingly slow, so why aren’t more consumers making the switch? Beyond concerns about reliability, price and charge point access, the supply chain constraints are alarming. Shortages of raw materials are a huge threat to battery production and there is a lack of skilled labour to deliver the requisite production. These constitute just two of the supply-side factors endangering the growth in EV adoption in the UK.
Constraints in Raw Material Supply
It is difficult to understate the enormity of the required increases in the supply of the materials used in EV manufacturing if EVs are to fully take over the roads. Take the UK alone: to enable the complete transition to zero-emission vehicles the entire global production of raw materials used for advanced batteries would need to increase around two-fold [7]. It's not a leap to state that it's unlikely all of these materials will be shipped to our shores alone. Increasing demand for resources to produce rechargeable batteries and charging infrastructure could significantly outpace the supply chain’s mining and production capacity [8].
Source: Visual Capitalist, 2022. This graphic is based on data from the International Energy Agency (IEA), showing the minerals used in a typical electric car
A recently announced contract between two UK-based lithium producers, Tees Valley Lithium and Weardale Lithium, provides a model to begin to offset geopolitical risks in the UK's supply chain dependencies at least [9]. New lithium mining techniques have also drastically improved the feasibility of sustainable extraction.
The lithium supply crunch has been a regular topic in news headlines over recent years. This challenge is not unique to EV production, with lithium-ion batteries required across many tech industries. Nor is this shortage unique to lithium [10]. All of this means that continuing to mine lithium is not enough on its own to meet future demand for battery cells. The EV industry must reduce its dependence on lithium through alternative options such as salt or magnesium.
Salt has a remarkably similar chemical structure to lithium. Sodium mining has greater geographical diversity and creates less environmental impact, offering a potentially sustainable substitute for lithium-based battery production [11]. German industry has already proposed a sea-water-based prototype that appears feasible and practical [11]. Nonetheless, lithium alternatives remain narrowly researched and their costs are high, meaning that lithium-based EV production remains the clear favourite among manufacturers.
Constraints in Labour Supply
Even putting aside the problem of materials shortages, increased production of EVs means a key skills gap is only growing, with too few technicians available to service the volume of zero-emissions vehicles predicted to be on UK roads. Analysis from the IMI predicts a shortfall of over 35,000 technicians by 2030 in the absence of urgent retraining [12]. An estimated 90,000 automotive technicians are required in the UK by 2030 to provide sufficient support to service EV production if the demand increase continues as expected [12].
The rate at which EV production can be accelerated will be dependent on the availability of skilled talent. This ranges from chemists required to produce batteries to computer analysts and material scientists required to design innovative EV solutions. The University of Warwick, in combination with the Faraday institute, has produced a framework to outline how both transport and utility sectors can train workforces to prepare them for the upcoming changes to the industry [13]. There is no overnight solution to plug the skills gap, with significant investment in training programmes required and delayed returns on those investments.
The Takeaway
So while the future may be electric, the path to that future is looking a little rocky. What does this all mean for our infrastructure clients?
Production infrastructure projects are needed to advance regional battery supply: The advantages of geographic network density in any supply chain are clear to see with geopolitical risks so high today. Moving battery cell production closer to vehicle assembly plants in efforts to integrate regional supply chains will require both manufacturing plant construction and increased mining infrastructure.
Public procurement is likely to accelerate in order to boost charging infrastructure: Straight procurement opportunities for long-term contracts for the installation and maintenance of EV charging infrastructure will be complemented by fleet management contracts. Private infrastructure providers need to be planning today to ensure that their ability to win contracts is optimised against public procurement strategies.
Increased criticality of electricity and power Infrastructure: With millions of EVs on the road by 2030, electricity supply will be in high demand. Large numbers of public chargers are required and electricity production needs to increase to meet EV charging demand. It will also be important to develop solutions to mitigate the customer impact on the electric grid, especially during peak charging hours.
Words by Alexandra Bicu
References
[1] Global EV Outlook 2021: The IEA Report | Knowledge | Fasken
[2] https://www.zap-map.com/ev-market-statistics/
[3] Benefits of Electric Cars on Environment | EV & Petrol Cars | EDF (edfenergy.com)
[4] Electric car statistics - EV Data [Update: Oct 22] | heycar
[5] 10 Cheapest Electric Cars To Buy in 2021 | EDF (edfenergy.com)
[7] https://www.thegwpf.org/content/uploads/2020/05/KellyDecarb-1.pdf
[10] Dig This: The Shift To EVs Requires A Massive Expansion Of Battery Metal Mining (forbes.com)
[11] https://www.newscientist.com/question/lithium-battery-alternatives/
[12] EV skills gap could materialise as soon as 2026, says IMI (fleetworld.co.uk)
Infographic - Total cost of ownership:
Infographic - Mineral Content: