Politicians make promises about the timescale for banning the sale of ICE (internal combustion engine) cars and moving to electric cars. Car manufacturers are the same, with Volkswagen promising:
“The Volkswagen Group is forging ahead with the fundamental change of system in individual mobility and systematically aligning with electric drives. The Group is planning to launch almost 70 new electric models in the next ten years – instead of the 50 previously planned. As a result, the projected number of vehicles to be built on the Group’s electric platforms in the next decade will increase from 15 million to 22 million. Expanding e-mobility is an important building block on the road to a CO2-neutral balance. Volkswagen has signed off a comprehensive decarbonization program aimed at achieving a fully CO2-neutral balance in all areas from fleet to production to administration by 2050. Volkswagen is thus fully committed to the Paris climate targets.”
“The Volkswagen Group has set milestones in all areas to be achieved in the coming years on the road to complete decarbonization by 2050. The measures follow three principles: first, effective and sustainable CO2 reduction. Second, switch to renewable energy sources for power supply. Third, compensate for remaining emissions that cannot be avoided. In order to improve the CO2 balance of vehicles throughout their lifecycle, for example, Volkswagen has already made a start on the supply chain. A detailed roadmap is currently being drawn up. There is particularly significant potential as regards steel and aluminum supplies.” Source: Volkswagen.
However, this ambition to increase electric cars faces some supply issues outside the cost issues which car manufacturers will face to produce electric cars, which are estimated to cost currently £10,000 more than ICE cars to produce.
The biggest supply issue is cobalt for the batteries for electric cars. “Car producers have already tried to buy forward supplies of cobalt due to their fears over the shortages which will be created by increased demand. Both Volkswagen and GM have commented on this. VW first proposed this in 2017, perhaps based on the car industry belief that suppliers would do as they were told as usual in the motor industry. Instead, talks broke down with mining industry sources saying “They are looking for prices below the market, they have a lot to learn about cobalt. We didn’t get into the details of how much tonnage they would need.” In a new world, old industries will need to learn that the low carbon economy has different power dynamics.” (Zero Carbon Our Choice 2020 Amazon Kindle)
Energy Reporters reported on 22/11/2018 that “A cobalt shortage could undermine attempts to bring electric cars to the market, suppliers are warning auto-manufacturers. The metal, a by-product of copper mining, is in demand for the lithium-ion batteries used in electric vehicles but shortages could delay the transition to green motoring as Cobalt will be in short supply from 2025 on, according to the Joint Research Centre, the scientific advisory at the European Commission.”
A further problem is that cobalt production is dominated by the DRC (Democratic Republic of the Congo). This poses real issues as the environmental benefits of cobalt in electric car batteries must be weighed against the costs of production which include (according to the World Economic Forum): “Social challenges and human rights abuses such as hazardous working conditions in poverty, exposure to pollution and other issues”.
Not only is production dominated by the DRC, but reserves, with 50% of global reserves in the DRC.
Finally, cobalt for car batteries will be competing with current uses of cobalt and cobalt for electric storage batteries. The cobalt needed if all UK cars were electric would be two years global production which is mainly used for other uses at present. This supply issue is significant. Cobalt prices may increase further as demand rises , increasing the cost of electric cars, or there may be insufficient cobalt to meet the demand for the targets set. VW’s plans for the next decade would use between 1 and 2 years annual cobalt production.
For countries and motor manufacturers, the supply and price of cobalt will be strategic issues.
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