lithium shortfall for gigafactories

There is a lithium shortfall for gigafactories announced, and a good way to understand it is that it takes at least five to seven years to build a lithium mine. With all the money in the world, you can build one in five years. But it takes 24 months to build a gigafactory, so that’s the disconnect. And still the automakers are announcing all these battery plants. At the same time, they should be announcing new lithium mines—or new lithium-refining capacity, at least, if they didn’t want to get into mining—because they go hand in hand. But that’s not happening yet. And as a result, any of the EV goals between 2026 and 2030—it’s a red alert. Most of these guys won’t even meet a fraction of their EV targets because of that.

Listen to an interview reported by Morning Brew Interview with Simon Moores, CEO of Benchmark Mineral Intelligence in December 2021. (listen here)

While there is plenty of lithium on the planet, it isn’t being extracted and refined quickly enough to keep up with the rapidly growing demand for batteries. By 2030, there’s projected by most to be a lithium deficit between 455,000 and 1.7 million metric tons each year.

However, I suggest this projection is too low. There is about 37kg of LiCO3 equivalent lithium in an EV battery, and 80 million cars currently manufactured globally. If a conservative 50m EVs are expected into production by 2030, the total demand for EV batteries would be 1.7 million Tonnes. I suggest the majority of vehicles will be EV, or 80 to 100m EVs. Include the production or conversion of trucks, buses and rail. Current production is about 0.22m tonnes. Lithium mining will be 30 times to 40 times increase, as there will be lithium for grid and household storage. We have to decarbonise the world to reduce CO2 emissions and batteries provide intermittency control in a renewable energy solution.

That is a lot of mines. Eg Lake Resources using DLE technology projects 25 kTpa (kilo Tonnes per annum). It would need 40 new mines equivalent capacity. There are about 150 companies on the ASX in this area (View the Google Sheet here)

CATL Lithium Shortfall for Gigafactory of 430GW By 2025

China’s largest battery producer, CATL’s, battery installation in China for the full year 2021 was 80.51 GWh, accounting for a 52% market share (China Automotive Battery Innovation Alliance Jan 2022) CATL got pinged by the Stock Exchange for a large share issue to fund their expansion, and said it had lithium-ion battery capacity of 106.41 GWh from January to September 2021, and new production has a design capacity of 220 GWh to 240 GW pa. They say they need to double capacity to 450GW by 2025, by adding 135GW per year.

Have lithium costs affected the price of lithium-ion batteries over the last few years?

Batteries have been going down in price and manufacturing costs the last 5 years, since the creation of Tesla’s Gigafactory: scale allows to make them cheaper.
Raw material costs have been low, but what’s happened in the last year is raw material costs, especially lithium, are rising significantly. Lithium is the big one here. And at the same time as these battery costs keep dropping, raw materials are a much bigger proportion of the pie—the cost pie. So lithium prices have gone up and they’re now impacting battery cells.

What does it mean when you say there’s a lithium shortage?

So the “structural shortage” is what the commodity industry calls it. That’s when there’s literally not enough capacity in the industry to meet that demand. This year was the year where supply got tight and then it has just fallen into shortage in the last few months. It’s a very clear shortage, a structural shortage. It’s kind of no going back.

Lithium Shortfall for Gigafactories – are automakers aware?

It’s funny, I think OEMs are quite a unique beast in this sense. The OEMs only plan to build battery plants. They don’t think about the raw materials. And that’s because they don’t come from that world. The traditional automotive supply chain is built to serve them, and they’re used to having everything available. So they announce new plants, but they do not announce the supply chains.

But the difference now with the supply chain for electric vehicles—it’s being built from scratch and doesn’t exist at the scale they need, so they don’t think about the raw materials, and we call this the great EV raw material disconnect. Two years ago, they weren’t even thinking about batteries. They are thinking about batteries now, which is good. But they’re still not thinking about raw materials. And that’s a huge risk to anyone that’s really making EVs beyond 2025 or 2026, which is nearly everyone.

Will lithium production increase in the coming years?

The next big one that’s scheduled to come on stream next year—and it’s the first big lithium chemical operation in maybe 15 years— it’s Lithium Americas in Argentina. Back in 2011, they started it. It’s now 2021, and it’s just about coming on stream.

USA Battery Factories

For the Google Sheet of batteries from ABB Report (Link here) or download from Google Sheets

RankCompanyLocationStart DateCapacity GWhExpandedNotes
1Panasonic-TeslaGigafactory 1, Nevada, US20163539by 2021
2LG Energy Solution (LG Chem)Holland, Michigan, US2013324By 2028
3Envision AESCSmyrna, Tennessee, US201228By 2028
4Imperium3Imperium, New York, US2019315
5SAFTJacksonville, Florida, US201111
6A123 SystemsUS Plant 1, Michigan, US0.150.15
7A123 SystemsUS Plant 2, Michigan, US0.150.15
8Samsung SDIAuburn Hills, MI, USproduction and sales
9Ultium (GM-LG Chem)Lordstown, Ohio, US20223030
10SK Innovation2nd Plant, Georgia, US202311.712US ban on SKI for 10 years except for VW and Ford puts plants in doubt
11Do Floride Chemicals DFD / KORE Power1010Energy Storage applications
12SK InnovationCommerce, Georgia, US20229.820US ban on SKI for 10 years except for VW and Ford puts plants in doubt
13TeslaAustin, Texas, US2022100CY, MY, M3
14TeslaGigafactory 2, Buffalo, New York, US202024Energy Storage applications
15TeslaFremont, CaliforniaFremont, California10Vehicle, expansion planned
16Akasol – Gigafactory 2Detroit, Michigan, US20210.42by 2023
18MicrovastClarksville, Tennessee, US20222
US Battery plants announce or in construction (from ABB)

European Battery Factories

For the Google Sheet of batteries from ABB Report (Link here) or download from Google Sheets. The sheer number means there will be a lithium shortfall for gigafactories announced.

RankCompanyLocationStart DateCapacity GWhExpandedNotes
1LG Energy SolutionWroclaw, Poland20184570
2SK innovationKomarom, Hungary, Plant 120207.57.5
3Samsung SDIGoed, Hungary20202.520by 2028
4Envision AESCSunderland, UK20102.52.5
5LeclancheWillstatt, Germany202012.3by 2024
6AMTE PowerThurso, Scotland202215
7BolloreErgue-Gaberic, France20090.50.5
8AkasolLangen, Germany20180.30.8
9LiaconOttendorf-Okrilla, Dresden, Germany20190.30.3
10TesvoltGermany20200.250.25Energy Storage
11Samsung SDI Battery SystemsPremstatten, Graz, Austria2015Former plant of Magna Steyr
12AMTE / BritishVoltBlyth, near Newcastle, UK20233535
14BMZ / Terra & othersKarlstein, Germany?3434
15Morrow BatteriesArendal, Norway2024832
16ListromNorth Rhine Westphalia, Germany?3030
17SK innovationIvancska, Hungary, Plant 32024530
18Zorlu / GSR CapitalTurkey20222525
19TeslaGruenheide, Germany2021Gigafactory 2022
20Northvolt ZweiSalzgitter, Germany20241624
22CATLErfurt, Thuringia, Germany202214100
23MicrovastBrandenburg, Germany20211212
24Northvolt EttSkelleftea, Sweden2021840by 2024
25InobatVoderady, Bratislava, Slovakia20210.110
26SK innovationKomarom, Hungary Plant 220229.816
27Automotive Cell Company (SAFT/Stellantis)Hauts-de-France, France2023824by 2030
28Automotive Cell Company (SAFT/Stellantis)Kaiserslautern, Germany2024824by 2030
29Samsung SDIPlant 2, Goed, Hungary20217.57.5
30Farasis EnergyBitterfeld-Wolfen, Germany2022616
31SVOLTUberhelm, Germany2023624
32Lithops / FAAMTeverola, Napoli, Italy20210.22.5(military, industrial and storage applications)
33FREYRMo I Rana, Norway202240
34GSR CapitalTrollhättan, Sweden2020?25
35PanasonicNorwayNot yet announcedMoU with Equinor & Norsk Hydro
36Blackstone ResourcesBraunschweig, GermanyInitially 100m battery cells
37Akasol – Gigafactory 1Darmstadt, Germany20212.55
Data from ABB 2021