The vulnerability of electric vehicle deployment to critical mineral supply

Applied Energy 255 (2019) 113844

Contents lists available at ScienceDirect

Applied Energy journal homepage: www.elsevier.com/locate/apenergy

The vulnerability of electric vehicle deployment to critical mineral supply a,b

a

a

a

Benjamin Ballinger , Martin Stringer , Diego R. Schmeda-Lopez , Benjamin Kefford , ⁎ Brett Parkinsona,c, Chris Greiga, Simon Smarta, a b c

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Dow Centre for Sustainable Engineering Innovation, Department of Chemical Engineering, The University of Queensland, St. Lucia, Australia Universiti Sains Malaysia, School of Chemical Engineering, Nibong Tebal, Penang, Malaysia School of Chemical Engineering, Imperial College London, Kensington, London SW7 2AZ, United Kingdom

HIGHLIGHTS

GRAPHICAL ABSTRACT

vehicle 2030 global stock tar• Electric gets greater than 100 million vehicles. graphite, lithium and cobalt a • Natural supply risk for electric vehicle batteries.

terbium, praseodymium • Dysprosium, and neodymium for electric vehicle motors.

silver bullet solution for risk man• No agement by substituting technologies. deployment pathway neces• Altered sary to alleviate substantial supply risks.

ARTICLE INFO

ABSTRACT

Keywords: Electric vehicle Supply chain Battery Motor Materials Carbon emissions

Electric vehicles are poised to play a large role in the decarbonisation of the transportation sector. World governments have pledged to bring 13 million plug-in electric vehicles on the road by 2020 and 100 million by 2030. The rapid expansion required to meet these targets, from a global stock of 5 million electric vehicles in 2018, has the potential to be constrained by material supply chains. This study has identified 7 key elements which are significant supply risks to the electric vehicle industry: battery grade natural graphite, lithium and cobalt for electric vehicle batteries, and the rare earth elements dysprosium, terbium, praseodymium and neodymium for electric vehicle motors. None of these elements are able to be substituted without (i) increasing the supply risk of the other constrained elements, or (ii) altering industry wide manufacturing processes. The inability to fully mitigate material supply risks at the required market expansion rates is a key issue for minimising carbon emissions from the transportation sector.

⁎

Corresponding author. E-mail address: [email protected] (S. Smart).

https://doi.org/10.1016/j.apenergy.2019.113844 Received 9 April 2019; Received in revised form 6 August 2019; Accepted 2 September 2019 0306-2619/ © 2019 Elsevier Ltd. All rights reserved.

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1. Introduction In the 2015 Paris Agreement, the target for the global plug-in electric vehicle (EV) stock was set to exceed 100 million vehicles by 2030 [1]. As of 2016, countries have pledged a combined total of 13 million vehicles to be on the road by 2020 [2]. Meeting these two targets will require the continued rapid expansion of the electric vehicle sector as it becomes a major player in the global vehicle market. This expansion will be facilitated in part through effective policy settings by governments and associated studies analysing the feasibility of sustained growth in the electric vehicle market. Rapid growth in EV sales necessitate similar growth across the breadth of the supply chain, and a key driver of this growth will be the maintenance of stable and reliable access to affordable raw materials [3,4]. The primary difference between EVs and conventional internal combustion engine vehicles (ICVs) is the electric motor and battery in the powertrain, both of which require specific materials to manufacture [5–8]. If the electric vehicle industry is to expand at the rate required to meet the targets set by governments, the demand for these materials will significantly increase, potentially causing supply/demand imbalances. Thus, the material requirements of specific EV components need to be analysed to (i) identify critical materials and to (ii) determine the rate of critical material supply expansion that is required to avoid growth constraints in the electric vehicle market. Several studies have forecast material demand from EV-specific components. Simon et al. [9] and Gaines et al. [10] forecast material demand for batteries to 2030 and 2050 respectively, though did not consider motor requirements. Other studies have investigated the use of rare earth materials in electric vehicles, including hybrid electric vehicles (HEVs), though have neglected the demand of all other materials [11,12]. Further, these studies are based on inconsistent growth forecasts which do not align with current government ambitions and rely on assumptions as to which non-commercial technologies will gain significant market share over the forecasting period. The aim of this study is to investigate the material demand that is required to meet government pledges on electric vehicle deployment. As such this paper will:

Fig. 1. Global plug-in electric vehicle (EV) stock (a) and global EV sales (b), showing both historical data (solid circles) and two forecasts: Open circles would reach both global stock targets (black squares) whilst minimising change in growth and peak annual sales. Smaller dots (blue) show the minimum constant sales growth required to meet the 2030 global target alone. (For interpretation of the references to colour in this figure legend, the reader is referred to the web version of this article.)

considered a conservative estimate to the average vehicle lifespan [15]. No recycling of materials from retired EVs was considered over the forecast time period. Two-wheeled and three-wheeled electric vehicles are not considered in this study, although they are included in The Paris Declaration on Electro-Mobility and Climate Change [1]. HEVs are also not considered, due to the absence of deployment targets for this vehicle class. Based on this modelling scope, to reach the target of 13 million global plug-in electric vehicles by 2020, electric vehicle sales would need to increase at an average of 55% per year in 2019 and 2020. This is roughly the same growth rate experienced between 2015 and 2018 [2,14]. If the 2020 targets are achieved, then the 2030 target of 100 million EV’s could be achieved even if there were a subsequent decline in global sales growth, as shown in Fig. 1. In this case, sales would need to peak at 11 million vehicles per year (shown by the open green circles in Fig. 1b). It is possible to obtain a 100 million global EV stock at much lower industry expansion rates if the 2020 EV targets are not met. A constant sales growth rate of 21.4% over the forecast period is required to meet the 2030 targets (shown by the small blue dots in Fig. 1a). The large variance in possible deployment pathways has a significant effect on material supply risks. This will be discussed in detail in the discussion section of this manuscript.

(i) Develop an EV sales scenario which meets both 2020 and 2030 targets set by world governments; (ii) Determine the material demand from EVs over the forecast period; (iii) Identify potential supply chain risks that may prevent the required expansion of the EV industry. A detailed study of the 2018 market provides the basis for material demand calculations. Technologies were assumed not to change over the forecast period in order to determine an upper risk bound to potential material constraints. 2. Historical and forecast plug-in electric vehicle stock and sales Fig. 1 shows the historical and forecast global stock and annual sales of EVs. The historical stock and sales for the years 2010–2017 were obtained from the International Energy Agency (IEA) Global Electric Vehicle Outlook 2018 [13], while 2018 values were obtained from Pontes [14]. According to these sources, global EV sales have increased dramatically in recent years, from 50,000 vehicles in 2011 to just over 3 million vehicles in 2018. By the end of 2018, the global plug-in electric vehicle stock was just over 5 million vehicles. The main electric vehicle sales forecast shown in Fig. 1 (open green circles) has been developed to minimise the necessary sales growth and total EV sales over the forecast period whilst still reaching both the 2020 and 2030 stock targets. The forecast assumes an average electric vehicle lifetime of 10 years which is based on the longest EV battery warranty period offered by automotive manufacturers in 2018 (with the exception of the Hyundai Kona Electric’s unlimited warranty). This is

3. Current market for plug-in electric vehicles 20 models were responsible for 51% of global EV sales in 2018 [14]. If we assume this is a representative sample, this provides insight into the material demand of the global plug-in electric vehicle marketplace. Table 1 displays the motor type of each of these 20 EV models. Permanent magnet motors, which are reliant on rare earth elements, appear to be the dominant technology for EVs. They are used in 100% of plug-in hybrid vehicles (PHEVs) and at least 62% of battery electric vehicles (BEVs), equating to at least 75% of all EVs by model. No data could be found on the motor type of two BEV models, both of which are 2

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Table 1 Sales quantities and motor specifications of the top 20 EV models sold globally in 2018 [14]. Values displayed as a dash (–) could not be found in the literature review. Vehicle model

2018 Global sales

Country of manufacturer

Vehicle type

Motor type

Battery size (kWh)

Refs.

Tesla Model 3 BAIC EC-Series Nissan Leaf Tesla Model S Tesla Model X JAC iEV E/S BYD e5 Renault Zoe Chery eQ EV BAIC EU-Series BYD Yuan EV BMW i3 BAIC EX-Series BYD Qin PHEV Toyota Prius PHEV Mitsubishi Outlander PHEV BMW 530e BYD Song PHEV BYD Tang PHEV Roewe Ei6 PHEV

145,846 90,637 87,149 50,045 49,349 46,586 46,251 40,313 39,734 37,343 35,699 34,829 32,810 47,452 45,686 41,888 40,260 39,318 37,148 33,347

U.S. China Japan U.S. U.S. China China France China China China Germany China China Japan Japan Germany China China China

BEV BEV BEV BEV BEV BEV BEV BEV BEV BEV BEV BEV BEV PHEV PHEV PHEV PHEV PHEV PHEV PHEV

IM/PMSRM* – PM IM IM PM – WR PM PM PM PM PM PM PM PM PM PM PM PM

50–75 20.3/20.5 40 60–100 60–100 19.66/22 43 41 18.2 41.4/54.4 42 42.2 38.6/48 13/18 8.8 12 9.2 16.9 16.6/20 9.1

[17,18] [19] [20] [21] [22] [19,23] [19] [24] [19,25] [19,26] [27] [28] [26,29] [19,30] [31] [32] [33] [19,34] [19,35] [19,36]

* Induction motor included for all-wheel-drive variants only.

An in-depth description of material inclusions, exclusions and the reasoning behind these choices are provided in the supplementary information under the heading Material Use in EV Technologies. Sections 4.1 and 4.2 provide an overview of the data used to calculate the material use in EVs.

produced from Chinese manufacturers. Given the strength of the rare earth supply chain in China [16], and the tendency for vehicle manufacturers to use the same technologies across their models (see Table 1), it is likely that these models also contain PM motors. If this is the case, then 100% of PHEVs and 85% of BEVs contain permanent magnets by model (100% and 86% by sales, respectively). Induction motors are only utilised in three of the top 20 EV models, all of which are produced by Tesla. However, all of these vehicles are in the top 5 models sold and account for 33% of all BEV (within the top 20 models) sales between them. Reluctance (with rare earth) and wound rotor motors are only utilised in one model each (Tesla Model 3 and Renault Zoe respectively) and make up 20% and 5% of global BEV sales each, respectively. An overview of the performance metrics of each motor type discussed here, amongst others, is provided in supplementary information under the heading EV Electric Motor Market. Lithium ion batteries are currently the sole battery technology used in modern plug-in electric vehicles due to their high specific energy and power densities compared to alternative battery types [37]. However, there are many different types of lithium ion battery used in EVs, each characterised by the active minerals used in their cathode [38]. A publication by McKinsey [39] reported that Nickel -Cobalt-Manganese (NCM) batteries represent the largest cathode market share in EVs globally, accounting for 57% of vehicles sold in 2017 [14,40]. 24% of the electric vehicle market utilise an NCM 111 (equal parts nickel, manganese and cobalt), 28% NCM 622 and 6% NCM 811. Lithium-IronPhosphate (LFP) batteries make up 24% of the market, Nickel-CobaltAluminium (NCA) 16% and Lithium-Manganese-Oxide (LMO) batteries 4%. An overview of the battery performance metrics is provided in supplementary information under the heading EV Battery Market to allow further understanding of each technologies place in the EV market.

4.1. Electric motor material use Permanent magnet and induction motor technologies dominate the current electric vehicle market, accounting for 86% and 24% of sales respectively (see Table 1) – note that the percentages do not add up to 100% due to the Tesla Model 3’s use of both a permanent magnet motor and an induction motor. The stable supply of materials for these motors is therefore essential if electric vehicle sales are to increase at the rates required to meet the 2020 and 2030 global plug-in electric vehicle stock targets. For this analysis, wound rotor motors were not considered due to their low penetration levels in the EV market. In addition, for the purposes of calculation, half of Tesla 3 sales were assumed to have an IM and the other half a PMSRM to account for the vehicles multiple motor types. This assumption will underestimate permanent magnet material use since the lower cost Tesla 3 variants do not contain induction motors. Given this assumption, the base market share of permanent magnet and induction motors were adjusted accordingly to 79.6% and 20.4% respectively. No distinction is made in market share or material use between BEVs and PHEVs since no data was found quantifying the difference in material usage between the motors in these vehicle classes. The key minerals identified for permanent magnet electric motors were those that are used in the permanent magnets, namely iron, boron, and the rare earth elements neodymium, praseodymium, dysprosium and terbium. Copper was identified as a key mineral for both PM and induction motors. The masses of these minerals used in each motor type in addition to the basis for key mineral identification is outlined in supplementary information under the heading Electric Motor Material Use.

4. Material use in EV technologies The electric motors and batteries used in plug-in electric vehicles are constructed from a multitude of minerals, some which are common to many other components in the vehicle. Only minerals that are unique to the electric motor or battery components or have high concentrations relative to non-EV specialised components are considered in this study.

4.2. Battery material use Given the appreciable market share of four lithium ion battery technologies, it is important to assess the material intensity of each

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technology type. Battery market shares for EVs in 2018 are assumed to be similar to those reported in 2017 since more up-to-date data could not be sourced [39]. These values have been listed earlier in this manuscript under the heading Current Market for Plug-in Electric Vehicles. The key minerals identified for EV batteries are those that are present in the cathode, anode and electrolyte (Li, Ni, Co, Mn, Al, Fe, P, graphite, F) of the battery as well as aluminium and copper in the battery module and pack. The selection of these minerals, the masses of the materials used in each battery type, as well as the method used to calculate material demand is provided in the supplementary information under the heading Battery Material Use.

The mineral supply values and the methodology by which they were obtained are provided in the supplementary information under the heading Material Supply for EV Electric Motors and Batteries. Fig. 2 shows the demand for each identified key mineral contained in EV motors and batteries based on the sales scenario from Fig. 1. The percentage of material production that is required for EVs varies by many orders of magnitude across the analysed elements. For eight of the elements, their 2017 supply exceeds their anticipated demand in 2030 by an order of magnitude or more. Therefore, the supply of these minerals seems unlikely to impact on the expansion of the electric vehicle industry. Seven materials, however, are forecast to require more than 10% of 2017 supply in 2030. These materials warrant further investigation to determine whether they pose a significant risk to global EV targets. These materials are battery grade natural graphite, lithium and cobalt, all of which are used in batteries, and the rare earth elements dysprosium, terbium, praseodymium and neodymium which are used in permanent magnet electric motors.

5. Material supply vs. demand for EV electric motors and batteries The material demand for EV motors and batteries in this section is expressed relative to the 2017 production of the respective material.

Fig. 2. Material requirements of plug-in electric vehicles in 2017, and forecasts for 2020 and 2030, all shown relative to 2017 material supply. The materials listed are those used in batteries, electric motors (*) or both (**). The left and right edges of each shaded area correspond to low and high estimates of the material requirements. For the 7 highest use materials, the upper estimate for 2030 is written in white text inside the shaded area.

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It should be noted here that the market share of permanent magnet motors in Tesla model 3’s does not have a significant effect on these results. A 100% PMSRM market share increases the maximum 2030 rare earth demand relative to 2017 supply to 103%, 75%, 32% and 29% for dysprosium, terbium, praseodymium and neodymium respectively. Although significant, it is small compared to the range of 2030 demand values computed and does not greatly affect the supply chain risks discussed below.

historical supply data. This indicates that electric vehicle batteries will demand an ever-increasing market share of each material unless supply is increased significantly above historical rates. The magnitude of this increase differs between materials, as does the degree to which each materials’ supply can be increased over the forecast period. 6.1.1. Graphite The forecasted demand for battery grade natural graphite is displayed in Fig. 3a along with historic supply data that has been modified from the USGS (calculations in supplementary information). The extrapolated projections for battery grade natural graphite production are also shown. It is clear that there will not be enough graphite to supply EV batteries if historic trends continue through to 2030. Due to the shape of the material demand curve, supply chain expansion will need to increase the most between 2017 and 2020 to prevent supply shortages. The annual growth rate required is 26.5% for the lowest graphite demand estimates, and 37.0% for the highest estimates. This calculation is based on the growth in non-battery markets following the 50-year historic trend, and the production of battery grade natural graphite in 2017 being 120 kt, the average value of the estimates shown in Fig. 3a. Annual growth rates of 20.8–29.2% and 39.8–61.3% are required for the 2017 upper and lower battery grade natural graphite production estimates respectively. There has been relatively low urgency surrounding graphite supply risks for electric vehicles, given EVs have historically only demanded a small fraction of total natural graphite supply. Furthermore, the increase in graphite demand for EVs in recent years has coincided with a lowering demand in the steel industry (the major user of medium flake natural graphite), which has kept prices low [44]. This has shielded the graphite market from much of the scrutiny experienced by other minerals. However, supply risks could be significant in the short term due to the rapid rates of expansion required, especially if an upturn in the steel market occurs before new graphite production can be brought online. The supply chain of natural graphite is highly localised in China, which accounts for 65% of total flake graphite produced globally [45]. This is a large supply risk since Chinese production has recently been cut due to environmental issues and there are further risks surrounding China’s mining and labour practices in this industry [46]. Chinese firms also account for 95% of the processing of flake graphite into a battery ready state [47–49], as well as a large portion of the supply of synthetic graphite, which accounts for 45% of the graphite used in EV batteries. As a result, switching from natural to synthetic graphite does not alleviate this supply concentration issue. Forecasts of graphite supply for EV batteries indicate that natural graphite will gain more market share due to its lower prices and the improving product quality coming from processing facilities [46]. However, the projections in these forecasts may be at risk due to a lack of supply chain diversification.

6. Dependency of future electric vehicle markets on critical material supply As summarised in Fig. 2, there are seven materials that will require more than 10% of their 2017 market supply by 2030 to fulfil the required growth to meet government ambitions. Each of these minerals have previously been identified as either critical or near-critical supply risks to the clean energy industry or the economy as a whole [41,42]. The following sections will overview the supply chains of these minerals in the context of meeting global EV targets. 6.1. Battery materials The historical supply and forecast demand of battery grade natural graphite, lithium and cobalt for plug-in electric vehicles is displayed in Fig. 3 and discussed in the following sections. The projected EV demand for all three materials increases at a faster rate than the extrapolation of

6.1.2. Lithium Fig. 3b displays the historic and extrapolated supply curves and projected EV demand curve for lithium. It can be seen that the demand for lithium in 2030 is far in excess of 2017 supply. In fact, EV demand is forecast to require nearly all of the global lithium produced in 2030 if supply increases at historic rates. Lithium production will need to be increased at rates unparalleled in recent history for electric vehicle demand to maintain a sustainable market share. Assuming lithium demand grows at 5.3% in all markets other than EVs (a direct extrapolation of supply growth from the last 50 years), the supply of lithium will need to increase between 7.9 and 9.7% per annum to accommodate the additional EV demand in 2030. However, an annual growth rate of between 13.7 and 17.8% between 2017 and 2020 is required to prevent lithium shortages. This is far in excess of the 9.33% compound annual growth rate forecast between 2018 and 2023 [50]. Australia, Argentina and Chile account for 91% of global lithium production. The high market share of these three countries gives the

Fig. 3. Data for the historical production of (a) Battery grade natural graphite, (b) Lithium and (c) Cobalt, from the United States Geology Survey (points) [43] and the forecast demand from 2017 to 2030 (green box). Solid lines show fits to the 10-year and 50-year data series, as labelled. (For interpretation of the references to colour in this figure legend, the reader is referred to the web version of this article.) 5

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store the same amount of energy. This shift has been largely driven by Chinese policy favouring EVs with higher specific energy batteries [58,59]. This aligns with EV design objectives which aim to reduce battery weight in order to reduce energy consumption during vehicle operation. The major market trend has been towards battery technologies which increase both material supply security and battery energy density. Research has focused on improving battery chemistry to achieve both of these aims. NCM batteries are transitioning from the more thermally stable NCM 111 chemistry to higher nickel (and lower cobalt) contents [62]. Tesla has also been advancing their NCA batteries to use less cobalt, and reports suggest that they use less than the NCM 811 cathode [61]. Lithium usage also decreases in these designs as higher nickel-based chemistries have higher specific energies. In terms of anode chemistry, silicon has shown superior single cycle performance to graphite [37]. However, silicon suffers from degradation over charging-discharging cycles. This has so far limited its industrial use, though it has been included in EV batteries in low concentrations [38].

lithium market a Herfindahl-Hirschman Index (HHI) value of 3090; HHI’s greater than 2500 indicate an elevated supply risk [51,52]. However, this market concentration is generally viewed as relatively low risk in terms of supply expansion due to the relative political and economic stability of these countries [53]. The biggest risk factor that has been identified is the rate at which production can be brought online due to potential delays in expanding current operations or opening new production facilities [54–56]. To highlight this issue, lithium production between 2010 and 2014 was significantly below the lower bounds of lithium supply forecasts [54]. Significant supply-demand imbalances will arise if these trends continue which may threaten global EV targets. 6.1.3. Cobalt In 2030, EV cobalt requirements could reach as high as 81% of 2017 production if EV production reaches the levels required to meet global targets (Fig. 2). Fig. 3c compares forecasted cobalt demand against historical and extrapolated supply curves. Production of cobalt has experienced linear growth over the past 30 years that significantly exceeds the 50 year exponential fitting. Assuming the demand for cobalt in non-EV markets follows the linear trend from the past 10 years, the supply of cobalt would need to increase by 8.3–11.0% per year to avoid supply shortages in 2020. The increase in supply required to meet EV targets could be an issue given the complexity of the cobalt supply chain. Approximately 90% of cobalt production is a by-product of nickel or copper mining [52,57]. Thus, the expansion of cobalt production is highly reliant on market dynamics of these metals. This could be a significant issue since these markets are not directly coupled; electric vehicle sales are not the predominant driver of nickel and copper demand. Further, approximately 50% of cobalt is produced in the Democratic Republic of the Congo (DRoC). DRoC’s high market share of production gives the cobalt market an HHI value of 2970, comparable to the lithium market. However, unlike with lithium, the DRoC is politically unstable and human rights violations exist in the countries’ cobalt mining practises. Considering this, together with cobalt’s status as a mining by-product, it seems that cobalt has a significant risk of supply instability in a market with rapidly increasing demand.

6.2. Motor materials 6.2.1. Rare earth Rare earth elements have been identified as the sole mineral group that poses a supply risk to the manufacture of EV motors (Fig. 2). From the rare earths, dysprosium demand was forecast to require the highest proportion of supply (relative to the elements’ 2017 production levels), followed by terbium, praseodymium and neodymium. Given that rare earth elements are all mined as part of the same ore body, increasing the production of one element will proportionally increase the production of the others. Since all rare earth elements are used in constant ratios throughout the forecast, dysprosium will remain the most vulnerable material within this analysis. Achieving the necessary production growth in dysprosium will alleviate the risks associated with the remaining rare earths. The historical and forecast supply and demand curves for dysprosium are displayed in Fig. 4. The historical data points assume a constant rare earth element production ratio over the last 50 years, referenced to 2005 values [63]. The demand for each rare earth element contained in EV permanent magnet motors increases significantly over the forecast period, though this is particularly true for dysprosium and terbium. The rare earth supply chain is required to expand the most between 2017 and 2020 to prevent supply shortages. Growth rates of 4.3–10.1%, 4.4–7.8%, 1.9–3.9% and 2.3–3.7% are required for dysprosium, terbium, praseodymium and neodymium, respectively between 2017 and 2020 to avoid supply constraints, assuming non-EV

6.1.4. Battery technology substitution A possible avenue to reduce the vulnerability of the EV industry to material supply is for EV manufacturers to actively select battery technologies which have lower supply chain risks. Table 2 displays the relative amount of each critical material used in each major EV battery types. LMO and LFP battery chemistries utilise no cobalt and low amounts of lithium and graphite compared to other technologies. However, in recent times the market share of these battery types has reduced, despite their relatively low use of high-risk materials. Furthermore, this trend is forecast to continue into the future [39]. The market is shifting away from these chemistries due to their low specific energies; EVs containing these chemistries need heavier batteries to Table 2 Relative amount of critical material used in each lithium ion battery chemistry (for a given battery energy content) [60]. Element/Characteristic

Lithium Cobalt Graphite Pack Specific Energy (Wh/kg)

Battery type NCM 111

NCM 622

NCM 811

LMO

NCA

LFP

100% 100% 89% 143

93% 56% 98% 155

93% 28% 100% 149

78% 0% 79% 121

86% 39%* 100% 159

74% 0% 94% 116

Fig. 4. The historical production of rare earth oxide, compared with the rate at which EV demand for rare earth metals is expected to increase in the coming decade.

* Tesla has developed low cobalt NCA batteries which use less cobalt than NCM 811 cathode chemistry [61]. 6

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rare earth demand continues to increase at the rate experienced over the last 10 years. Whilst these growth rates seem relatively low compared to other materials, permanent magnet wind turbine generators and NiMH batteries used in hybrid electric vehicles use non-negligible quantities of rare earth elements [64]. The simultaneous deployment of multiple low carbon technologies will be required in any low carbon future. Thus, in the low carbon scenario featured in this study, non-EV rare earth demand will likely grow at rates much faster than that forecast. This will increase the rate of rare earth supply expansion that is required to avoid supply shortages above the calculated values. The growth of the rare earth supply chain at the rates required to meet global EV targets are subject to numerous risk factors. Firstly, the supply chain of NdFeB magnets that are used in permanent magnet motors is highly monopolised by Chinese firms. Their presence in the rare earth supply chain is so great that permanent magnets cannot be produced without passing through China. This monopoly has played a large part behind the plateauing in rare earth supply over the last 10 years (see Fig. 4) [65,66]. Various studies have cited price manipulation and the industries environmental harm as the reasons behind stagnating supply [65,67]. It has been estimated by the United States Government Accountability Office that it would take 15 years to build a rare earth supply chain in the U.S. [68], longer than the forecast period in this study. The long lead times for supply chain development is mainly due to the ownership of key intellectual property rights by Chinese firms and the lack of rare earth processing intellectual capital outside of China [68]. In addition to this, Chinese firms have key economic advantages in this area in the form of favourable environmental policies for this sector, depreciated assets and the market power to manipulate rare earth prices [66,69]. It is thus evident that growth in rare earth supply and the production of NdFeB magnets for permanent magnet motors is highly reliant on Chinese policy and will be subject to the risks associated with a non-geographically diversified supply chain.

Fig. 5. The relative distance driven globally by plug-in electric vehicles after 2018 under three projected scenarios. The solid line is the reference scenario of Fig. 1, a projection which minimises the necessary sales growth and maximum output whilst still reaching both the 2020 and 2030 stock targets. The dotted line shows a scenario that meets the 2030 stock target with the minimum necessary sales growth required but misses the 2020 target. The dashed line is calculated for a scenario where EV sales are restricted to a 5.3% increase per year, the 50-year historical growth in global lithium production.

and is set to “100%” of possible emissions reductions over the forecast period. The second scenario sets the annual EV sales growth rate to a constant value of 21.4%. This is just enough to reach the 100 million EV stock target in 2030 but does not deliver on the 2020 target. This scenario results in a 21% loss in potential emissions reductions prior to 2030 due to the vehicle stock deficit over the forecast period, as shown in Fig. 1. However, the higher annual sales in 2030 in this scenario would deliver further emission savings post-2030. The comparison between these scenarios highlights the trade-off between the short-term material supply chain expansion rate and short-term emissions abatement vs a higher total demand for materials over the forecast period and the potential for longer term emission reductions. The final scenario investigates the potential shortfall in carbon abatement as a result of material supply shortages. The production of lithium, an element used in all EV batteries, has grown at an annual rate of 5.3% over the past 50 years [43]. Thus, this scenario assumed that EV deployment can only grow at the same rate, assuming lithium supply is the critical limiting factor and that production growth rates cannot be increased. Under this scenario, less than 30 million EVs would be in use in 2030, far lower than the 100 million targeted, leading to a 62% loss of potential emission reductions. This third scenario highlights the potential importance of material supply for reaching EV targets. Material supply chains have the potential to significantly curtail the expansion of the electric vehicle industry. Knowledge surrounding all potential decarbonisation risks is essential to minimise the possibility of falling short of required emission targets. Further research is thus required to develop electric vehicle (and low carbon technologies more broadly) deployment pathways that are resilient to real world material supply chain risks.

6.2.2. Motor technology substitution Although there are alternate motor technologies available (including induction motors), the dominance of permanent magnet motors in the industry mean that technology switching would significantly hamper the production of EVs in the short term due to the inevitable delays that would arise from changes in vehicle design and manufacturing processes. While some switching may be triggered by rare earth supply issues, this is a non-trivial concern in the face of the high growth rates required to meet global EV sales targets. 7. Discussion From the above analysis, it is clear that material supply issues are at risk of constraining electric vehicle market growth over the forecasted period. This is particularly true in the next few years, with high growth rates required to meet 2020 global EV stock targets. The setting of these EV stock targets is an important step for governments to help facilitate the expansion of the EV industry. However, no evidence in academic literature exists to suggest that these targets have been set with consideration of material supply concerns. To the contrary, deployment pathways of decarbonisation technologies are typically constructed based on economics that does not encompass the complexity of material supply chains [70]. As such, it is unreasonable to assume that the sales scenario presented in this study is optimal to achieve the overarching goal of reducing emissions from the transport sector. To illustrate this point, we can look into the relative carbon emissions abated by the EV stock by calculating the cumulative km that would be driven using electric vehicles rather than ICVs. Three scenarios were calculated and are shown in Fig. 5. The projection that meets both 2020 and 2030 vehicle targets leads to the greatest distance driven by EVs overall – this is scenario analysed throughout this study

8. Conclusions The rapid expansion of the electric vehicle industry is poised to play a large role in the decarbonisation of the transportation sector. World governments have recognised this and pledged to bring 13 million plugin electric vehicles on the road by 2020 and 100 million by 2030. However, the significant differences in material requirements for electric vehicles compared to conventional vehicles raises concerns around supply and demand for several minerals. Stable access to minerals is vital to achieve the pledged expansion of the electric vehicle industry. Seven minerals were identified as potential supply risks for electric vehicles: lithium, cobalt and graphite for batteries and the rare earths neodymium, praseodymium, dysprosium and terbium for electric 7

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motors. Forecast demand will outpace historical supply trends for each of these elements, and there are significant risks that may prevent the supply of each element from increasing at the rates required to meet electric vehicle targets. For battery technologies, lithium, cobalt, and graphite supply chains all suffer from issues such as regional concentration, geopolitical instability and risk, and growth in competing markets. The main risk identified for lithium expansion are potential delays to the expansion of output from existing mining operations, or the construction of new mines. Cobalt faces several risk factors, namely its status as a co-product of nickel and copper mining and that 50% of production originates from the politically unstable Democratic Republic of the Congo. The supply chain for battery grade natural graphite is highly complex and also faces several risk factors. Graphite risks are largely attributed to the steel industry which consumes the majority of medium sized flake graphite. In addition to this, the supply of graphite, and particularly the processing of graphite into a form suitable for batteries, is monopolised by Chinese companies and poses a significant geopolitical supply risk for electric vehicle battery manufacturers. Significant market penetration of four types of lithium ion batteries allows technology substitution to be a potential avenue to alleviate supply risks. However, this solution is somewhat limited due to the time needed for research in superior battery chemistries to come to fruition. Future lithium battery generations show potential to significantly alleviate cobalt usage in the medium term. However, significant advances still need to be made to significantly reduce the demand for lithium and graphite. The production of electric motors to meet electric vehicle targets is most vulnerable to the supply of rare earth elements, particularly dysprosium. The supply of dysprosium, and rare earths in general, is heavily monopolised by Chinese firms, which has led to geopolitical issues in the past. Diversification of the supply chain will take longer than the period forecast in this study due to the lack of intellectual property held by non-Chinese firms. Technological substitution would be a very challenging solution to this supply risk as rare earth motor technologies hold an 89% share of the electric vehicle market. An industry-wide substitution of permanent magnet motors would likely cause a significant deficit in electric vehicle production due to the additional time and capital allocation needed to develop the technology and bring it to market. Even if the production of electric vehicles could be ramped up to meet 2030 targets, deficit in the intervening years would likely cause a significant shortfall in emission reductions. It is clear that material supply chains have the potential to constrain the rapid growth in deployment of electric vehicles necessary to meet government targets. As such, this issue should be incorporated into analyses of organisations that influence policy in this space. There are many different pathways that can be taken to reduce emissions and it is unreasonable to assume that the economically optimal solution will directly align with the lowest risk solution in all cases. A wider body of literature in this area will allow researchers, industry and government to mitigate or avoid supply chain bottlenecks before they arise.

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