Last year, electric vehicles outpaced smartphones and laptops as the primary demand source for cobalt, which is a rare metal utilized in lithium-ion batteries, for the first time. According to the Cobalt Institute, electric and hybrid vehicle sales increased in 2021, consuming 59,000 tonnes of cobalt, or 34% of overall demand. This was more than the 26,000 tonnes of metal utilized in cell phones and the 16,000 tonnes used in tablets and laptops. Cobalt demand was 175,000 tonnes, compared to 160,000 tonnes of mined supply.
The disparity in those figures underlines one of the most significant issues that the automobile industry will face as it transitions to electric vehicles: obtaining sufficient raw materials. Concerns about future supply shortages for critical battery metals such as cobalt, lithium, and nickel are growing as additional electric vehicles are released. By 2026, the automotive industry will make up half of the cobalt demand.
Because cobalt is a byproduct of nickel and copper mining, and supply is highly concentrated by area and company, it is considered a particularly troublesome metal. The Democratic Republic of Congo produces about three-quarters of the world’s cobalt, with Chinese businesses and London-listed Glencore dominating production.
According to the Cobalt Institute, the central African nation generated 118,000 tonnes of cobalt in 2021, far more than Australia, which produced only 5,600 tonnes. This has fueled rumors that a major automaker may buy a miner. Elon Musk, the CEO of Tesla, said he was receptive to the notion at a recent industry meeting. He declared at the FT Future of the Car Summit, “It’s not out of the question. We will address any barriers to hastening the global transition to sustainable energy. We don’t want to buy mining firms, but if that’s the only way to get the transformation moving faster, we’ll do it.”
Tesla wants to produce 20 million electric cars each year, up from 1 million last year. Lithium-iron phosphate batteries, that are low-cost are powering an increasing number of electric vehicles in China, the world’s largest EV market, despite their limited range and performance. However, nickel-cobalt chemistries continue to be the most popular in the US and Europe. According to the research, in 2021, these batteries would account for three-quarters of worldwide EV demand. The Cobalt Institute’s president, Adam McCarthy, stated, “Cobalt-containing batteries are a solution of choice for many automobile makers in China, Europe, and North America.”