EV sales rocket but mineral constraints likely

EV demand is soaring but may be restricted by mineral supply issues and other constraints.

So says a Global Electric Vehicle Outlook 2022 report from the International Energy Agency (EIA), which suggests first quarter EV sales were around two million – up 75% on the same period last year.

However, the report finds much more needs to be done to support charging infrastructure and heavy-duty vehicles making the switch.

“The COVID-19 pandemic and Russia’s war in Ukraine have disrupted global supply chains, and the car industry has been heavily impacted,” the report’s executive summary explains.

“In the near future, EV delivery delays to customers may dampen sales growth in some markets. But in the longer term, government and corporate efforts to electrify transport are providing a solid basis for further growth in EV sales.”

The report presumes EVs will represent more than 30% of vehicles sold globally in 2030 across all modes (excluding two- and three-wheelers – still well short of the 60% share needed by 2030 to align with a trajectory that would reach net zero CO2 emissions by 2050.

It adds that the global market value of electricity for EV charging is projected to grow more than 20-fold, reaching about US$190 billion by 2030 – the equivalent to about a 10th of today’s diesel and gasoline market value.

The simultaneous electrification of road transport and the deployment of decentralised variable renewables such as rooftop solar will make power grid distribution more complex to manage, the report explains.

Although grid simulations suggest that by 2030 EV loads in major car markets should not pose significant challenges because EVs are generally likely to be less than 20% of the overall vehicle stock, the report says some early adopter cities could face grid congestion pressures.

Digital grid technologies and smart charging are the key to transforming EVs to an opportunity for grid management, the report suggests.

It points out that in May 2022, lithium prices were more than seven times higher than at the start of 2021.

“Unprecedented battery demand and a lack of structural investment in new supply capacity are key factors.”

Meanwhile, lithium prices are expected to keep EV costs up.