Falling EV demand affects lithium price and supply chain

Carbon reduction has become an increasingly important topic in recent years, as more and more people become aware of the negative impact of carbon emissions on the environment. 

The lithium mining industry is integral to the electric vehicle (EV) supply chain and is no exception. Efforts are being made to reduce the carbon footprint of the industry, which is crucial for the production of electric car batteries.

Electric cars have gained popularity in recent years as a more environmentally-friendly alternative to traditional fossil fuel-powered vehicles. But the truth is, the emissions produced in the supply chain of electric car batteries also come into play. Carbon reduction in the mining of lithium also has a significant effect on the overall emissions of cars and other transportation devices. 

To reduce the carbon footprint of lithium mining, several measures can be implemented: the use of renewable energy sources, such as solar or wind power, can help to reduce the carbon emissions associated with the extraction of lithium. Additionally, recycling lithium from old batteries can also help to reduce the demand for new lithium mining, which in turn can help to reduce carbon emissions.

Another way to reduce the carbon footprint of lithium mining is to focus on more sustainable mining methods. This is where EVs come full circle as they are used to transport lithium on mining sites, rather than diesel-powered vehicles, which can help to reduce carbon emissions. Additionally, using more efficient extraction methods can also help to reduce the carbon footprint of the mining process.

Volatility slows EV production, reducing lithium prices

Understanding the impacts of the lithium production cycle on the wider EV industry accompanies the supply and demand argument.

Lithium prices have seen record highs over recents years thanks to exponential growth in demand from automotive manufacturers. As the sale of EVs slows, lithium prices take a hit, reducing the material from US$85,000 per tonne—almost double the price seen at the beginning of 2022. 

The drop in vehicle sales across China next year, due to governmental subsidy cuts, is likely to impact this further as, until now, the country was responsible for half of EVs purchased. 

“November and December are usually very big months for electric vehicle sales in China,” says Caspar Rawles, Benchmark Mineral Intelligence (BMI) Analyst.

“There is normally a large fall in electric vehicle sales in January, which next year will be exacerbated by subsidy cuts in China. We expect a demand drop in the first quarter.”

A chance to rethink the EV battery?

Despite the efforts being made to reduce the carbon footprint of lithium mining, there are also alternative options for electric car battery formulation that do not rely on lithium. For example, one alternative is the use of nickel-metal-hydride batteries, which do not require lithium for their production. These batteries are also more efficient than lithium-ion batteries, which can help to reduce the overall carbon emissions of electric cars.

Another alternative is the use of solid-state batteries, which are made using solid electrolytes instead of the liquid electrolytes used in traditional lithium-ion batteries. These batteries are more stable and have a higher energy density, which can help to increase the range of electric cars and reduce the need for frequent charging. Additionally, solid-state batteries are also more environmentally-friendly, as they do not require the use of rare earth metals, which are often associated with environmental degradation.

Reducing the carbon footprint of lithium mining is an important step towards making the electric car industry more sustainable. By implementing measures such as the use of renewable energy sources, recycling lithium, and more sustainable mining methods, the carbon emissions associated with lithium mining can be significantly reduced. Additionally, alternative options for electric car battery formulation, such as nickel-metal-hydride and solid-state batteries, can also help to reduce the overall carbon emissions of the electric car industry.