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In this edition’s Weekly Wonder, we’re wondering, is a lithium shortage coming, and are we prepared?

It’s an important question that we’ll try to answer, but first a look at some lithium facts:

• Lithium is the world’s lightest metal and the lightest solid metal.
• It appears silvery white.
• The metallic compound part of lithium is used for batteries to power gadgets like smartphones, tablets, and laptops, as well as electric vehicles (EVs).

Where does lithium come from?

Most lithium is mined in Latin America and Australia.

• We produce over 80,000 tons of lithium annually.
• And there are reserves of almost 80 million tons.
• However, 60% of those reserves are in China, creating concerns over how secure supplies are for the USA, Europe, and the rest of the world. What happens if China decides to hang onto its lithium reserves?

How much does lithium cost?

Huge price rises have seen lithium prices reach record highs:

• In March 2021, lithium prices were over $12,600 per ton.
• That’s an 88% increase since the start of 2021 and the highest price seen since March 2019.

So is there actually a lithium shortage?

Technically no, there’s not a major shortage right now, but with demand for EVs growing — not to mention the increase in demand for smartphones, tablets, laptops, etc. — lithium prices are set to soar, and manufacturers will pass those price increases onto customers.

• A lithium deficit of between 455,000 and 1.7 million metric tons each year is predicted by experts.
• Reuters reported that market analyst Benchmark Mineral Intelligence (BMI) predicted an “acute” shortage of lithium from 2022 onwards.
• Then there are those who say things will be fine in the long-term, like Simon Moore, CEO of Benchmark Mineral Intelligence: “Long-term, it will be fine. The price will be fine. There’s no geological shortage.”
• You can read a full interview with Simon Moore over at Morning Brew.

So, it seems like the shortage is a supply and logistics issue rather than an actual shortage of the metal compound itself. There are a few reasons behind this:

• Building a lithium mine takes between five to seven years.
• Complications with opening new mines can mean things take even longer. Rio Tinto, one of the world’s largest mining companies, recently planned a new lithium mine in Serbia, but plans have been suspended after protests from locals.
• We’re building gigafactories — huge factories that produce batteries for EVs on a gigantic scale — in as little as 24 months, and at the rate these are springing up, we should also be opening new lithium mines or announcing new lithium-refining capacity, but we’re not.
• This leads to what’s known as a “structural shortage” where there’s simply not enough capacity to meet demand.
• We’re also not recycling batteries as much as we could be.
  In the EU, companies are required to collect up to 45% of batteries at the end of their life, for repurposing or recycling — but few of these batteries are lithium-ion ones. That’s because they’re often built into devices, making them hard to dismantle, or the devices they’re in are valuable, so likely to be exported for resale.

What does this mean for the future of EVs?

A report from the Center for Automotive Research, or CAR, predicts that between 2022 and 2029, we’ll see a shortage of the supply of new vehicles totaling 18.7 million cars due to the limited capacity for lithium-ion battery cells. After 2029, we should supposedly be back on track in terms of lithium supply and battery production.

The good news is that the lithium shortage isn’t likely to affect the availability of your favorite gadgets, although we may see price increases. But it’s possible that moving to fully electric vehicles might not be the best way forward:

• There are those who say we should be moving to hybrid vehicles rather than the entire planet shifting to EVs. And when considering how much of the planet’s lithium is held in China, and what that could mean for the security of our supply, that certainly makes sense.
• But hydrogen’s expensive to make, store, transport, and distribute.
• It’s also too inefficient, according to experts.
• Elon Musk also described hydrogen power as “stupid.” Hmm.

There are pros and cons to both sides, but the good news is that, provided we can overcome short-term structural shortages, things should be fine in the long term. And we’re already researching other battery compounds that could replace lithium, as well as other lithium compounds we could use instead of lithium-ion.