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Lithium prices are up 700%: We need to reuse EV batteries

Several car manufacturers have started reusing EV batteries—and this is necessary, a new IEA report shows. Illustration: Bigstock/Gorynvd

The demand for raw materials for batteries is increasing in line with the sale of electric vehicles, but the supply cannot keep up. This is partly due to supply issues created by the war in Ukraine. An expert says that recycling can alleviate part of the problem in the long term.

In the long term, the extraction and production of lithium, among other things, must be significantly increased to match the demand for raw materials used in the production of EV batteries, according to a new report from the International Energy Agency (IEA). The report is titled Global EV Outlook 2022.

According to the report, sales of electric vehicles increased by more than 6 million worldwide in 2021. In total, there are now more than 16 million electric vehicles on the roads around the world, which is a means that their number tripled in three years. Demand only seems to be rising.

The global fleet of electric cars has tripled in just three years. Illustration: IEA

At the same time, the price of lithium, an important part of EV batteries, has risen by 700 percent from the beginning of 2021 to May 2022. In addition, the price of nickel and cobalt is also rising.

The price increase is caused by the fact that the production of, among other things, lithium cannot keep up with demand.

In addition, Russia’s invasion of Ukraine has created additional supply issues Russia normally delivers 20 percent of the global supply of nickel used in batteries.

According to the report, the price of EV batteries will therefore increase by 15 percent in the near future.

The price surge comes after several years of a downward trend in EV battery prices. It is therefore important to diversify and expand the production as well as increase the extraction of lithium.

According to the report, this will require considerable efforts to diversify both battery production and supply of critical minerals in order to reduce the risk of bottlenecks and price surges as well as to ensure future growth in the adoption of electric vehicles.

No alternative to lithium

“There is nothing that can replace lithium—not even in the future” says Niels J. Bjerrum, professor at DTU. He researches the development of batteries and fuel cells. According to the professor, lithium will also be essential for the production of batteries in the future.

Work is underway on other technologies that, however, remain a pipe dream for the time being—e.g. lithium-air batteries, which in theory will have a capacity ten times higher than the conventional lithium batteries we use today.

Niels J. Bjerrum describes the lack of materials such as cobalt and nickel as less critical, as there are alternatives.

In Europe and China, there is a widespread adoption of electric cars among the citizens, while the US is still gearing up. Illustration: IEA

Fundamentally, Niels J. Bjerrum agrees with the IEA that battery price increases are a plausible future scenario. “With the war in Ukraine and other things, supplying the materials becomes more difficult, so the price goes up. You can compensate a little by streamlining the process, but it is a fine balance.”

Niels J. Bjerrum emphasizes that battery prices are also affected by factors other than the supply of lithium.

There is enough lithium

According to Niels J. Bjerrum, there is in principle good reason to be optimistic, especially in the slightly longer term. There is enough lithium in the world to cover our needs for the production of EV batteries—if we extract it quickly enough.

“There are quite large deposits of lithium around the world, but right now, reusing lithium is more expensive than extracting new material.”

Niels J. Bjerrum estimates that the incentive to reuse lithium will increase along with the price.

“There is no incentive to reuse if it’s cheaper to extract it directly from the ground. If the price rises, it will make more sense to reuse it.”

Recycling is part of the solution

The batteries must be reused. We can shred the material and dissolve it. There are both mechanical and chemical methods for reusing the materials in batteries,” Niels J. Bjerrum says.

According to the professor, reuse or recycling is part of the solution if the increasing demand for raw materials used for electric vehicles is to be met—even if we work on increasing the extraction and production in parallel.

“If we are to drive electric cars for the next hundred years, we cannot just use up the lithium. We have to reuse it.”

As the situation is now, Niels J. Bjerrum estimates that we will still need to extract lithium. There is not enough of it extracted yet for the whole world’s demand to be met by recycling alone.

“If we need to produce a lot of new batteries right now, there isn’t enough lithium in the old ones, so we will have to continue to extract more—but at some point, most cars will run on batteries containing reused lithium.”