The automotive industry may face another shortage in addition to the chip shortage over time. Analysts warn that European parties are investing heavily in battery factories, but investments in extracting the necessary raw materials in particular are lagging.
Several analysts warn Reuters news agency that a shortage of raw materials for batteries is imminent. Specifically, these include lithium, nickel, manganese and cobalt. If shortages of such materials occur, this could push up the cost price of batteries. And with it, the cost price of electric vehicles.
Major impact
The impact could be significant. For instance, rising cost prices could not only put pressure on carmakers' profit margins, but also affect the transition to electric driving. This transition, in turn, plays an important role in achieving climate goals.
"It is a serious question whether supply can keep up with demand in the battery supply chain," Daniel Harrison, analyst at Ultima Media, told Reuters.
Battery factories on European soil
European car manufacturers are investing heavily in battery factories. One example is Volkswagen, which is planning six battery plants on European soil. However, consider also Daimler, recently joined a massive project by Stellantis. As part of this project, four battery plants are on the stampede.
In total, there are nearly 50 planned projects across the EU. This should be enough to meet local battery demand on European soil by 2030. The capacity is some 640 gigawatt hours, enough for some 13 million electric vehicles. Analysts at Ultima Media estimate global production in 2030 to be around 2,140 GWh, compared with demand of 2,212 GWh.
Benchmark Mineral Intelligence, warns to the news agency of missing investments in getting the needed raw materials out of the ground. The market analyst speaks of the "big commodity mismatch". Caspar Rawles, head of price and data analysis at Benchmark Mineral Intelligence, points out that the price of lithium carbonate has doubled in a year.
Chip shortage
The fact that component shortages can lead to major problems is demonstrated by the chip shortage, among other things. Several car manufacturers were already forced to temporarily suspend or scale down their production due to the shortage. Just last week, Toyota announced it would cut production by about 15% next month.
With this, Toyota is far from the only carmaker facing problems. Other recent examples of manufacturers reducing or temporarily shutting down production due to the chip shortage include Audi, BMW, Ford, Opel, Stellantis, Volkswagen and Volvo.
The chip shortage is also causing problems in the Netherlands. As recently as August, VDL Nedcar in Born, Limburg, was forced to temporarily halt production.
Chip shortage continues for now
TSMC, the world's largest chip manufacturer, recently predicted that the chip shortage will continue into 2022. Several parties including TSMC previously announced investments in expanding their production capacity. However, realising this capacity takes time, so the shortage persists for now.
Author: Wouter Hoeffnagel
