As the electric vehicle markets stand on the brink of explosive growth, governments and the industry must proceed with caution as they need practical strategy to manage this fast-growing segment, says a report.
A number of governments and car makers have ambitious plans for electric vehicles, but car makers are facing challenges to secure supplies of raw materials used for battery production, the report by research organisation ATKearney Energy Transition Institute said.
"Governments, mining companies, battery producers and carmakers need strategies for an industrial and technological energy transition to reduce CO2 emissions, based on solutions that are practical, safe and economically viable," said Richard Forrest, Chairman, AT Kearney Energy Transition Institute.
According to the report, cobalt is in particularly short supply globally and reserves could be depleted completely by the time 300 million EVs are produced - a modest proportion compared to the 1.2 billion cars on roads today.
"Electric car batteries rely on a host of rare materials from lithium and nickel, to cobalt. Battery makers around the world are struggling to secure supplies of these key ingredients as demand outstrips supply," said Romain Debarre, MD, ATKearney Energy Transition Institute.
In the Indian context, Abhishek Poddar, Partner, Energy & Process Industries, AT Kearney India said, "It is critical that India takes into account the practical aspects related to EV rollout, as it defines its long term strategy for the sector. The problem is further complicated by the fact that we have limited availability of the natural resources required for LIB battery manufacturing".
"Government of India is cognizant of these issues. In the latest automotive policy, it has focused on overall pollution reduction through multiple technologies and regulations by implementing stiff targets, and by not demanding 100 percent switch to EV by 2030," added Vinod Kumar, Partner, Automotive Transport & Infrastructure with AT Kearney India.
In addition, global lithium production has risen 7 percent a year since 2013, but to keep up with demand, miners need to accelerate production to more than 9 percent a year. Rising demand and tight supplies have also led to price increases.
"The challenging natural resource shortage is further exacerbated by a lack of viable and cost-effective reuse and recycling options for electric car batteries," Debarre added.
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