Recently, it seems not a week goes by without game changing announcements related to the electric vehicle (EV) sector from automakers, battery manufacturers or governments.
The latest is Volkswagen’s announcement that they will now be spending USD 84 billion (all currency is USD), up from USD 10 billion previously announced earlier this year, with the goal of bringing 300 EV models to market by 2030. Perhaps most relevant to the lithium market is that around USD 60 billion of this investment will be going towards lithium ion battery production and development.
What does a commitment like this mean for the critical material needs of a major automaker like Volkswagen? If one takes Volkswagen’s publicly announced needs of 200 GWh of battery cell production capacity by 2025, and assumes 0.9 kg of lithium carbonate equivalent (LCE) needed per kWh (some sources have it much higher at up to 3 kg of LCE/kWh), this would require 180,000 tonnes of LCE – greater than the entire global lithium market in 2016 (~160,000 t/LCE).
The other major German automakers have also announced major commitments to EV production. BMW, seller of 2.34 million cars last year, has announced they will be mass producing EVs by 2020 with 12 different models available by 2025. Mercedes-Benz has announced they will be electrifying their entire line-up by 2022, adding up to 50 new EV options, with Smart, another Daimler subsidiary, going entirely electric by 2020.
It is not just the automakers pushing the rapid adoption of EV technology. Governments are also forcing the issue by announcing plans for future bans on traditional gasoline and diesel engine cars. The most recent came from China where Xin Guobin, China’s Vice Minister of Industry and Information Technology, has acknowledged the ministry is looking at plans to implement such a ban “in the near future.” This has enormous implications for future lithium demand when one realizes that 23693400 cars were sold in China in 2016 alone.
The EV age has arrived, and the critical materials supply chains, notably lithium but also rare earths, will need to grow exponentially to keep pace with the rapidly growing demand With demand already outstripping supply, lithium prices continues to move higher with lithium carbonate and lithium hydroxide prices in August up 9.6 % (USD 15.625/t) and 2.1% (USD 18.500/t) respectively according to Benchmark Minerals Intelligence.
Automakers, governments and other players in the lithium energy storage sector will have to react quickly to ensure that the critical materials needs to fully implement EV technology can be met. Avalon’s advanced Separation Rapids Lithium Project is well-positioned to become a new supplier of the high quality, sustainably produced, lithium battery materials required to meet the future needs of the rapidly growing electric vehicle sector.
Avalon Advanced Materials Inc. is a Canadian mineral development company specializing in niche market metals and minerals with growing demand in new technology. The Company has three advanced stage projects, all 100 %-owned, providing investors with exposure to lithium, tin and indium, as well as rare earth elements, tantalum, niobium, and zirconium. Avalon is currently focusing on its Separation Rapids Lithium Project, Kenora, ON and its East Kemptville Tin-Indium Project, Yarmouth, NS. Social responsibility and environmental stewardship are corporate cornerstones.