The news that GM, Ford and other automakers plan to slow down production of EVs in response to slower sales growth (EV sales grew by only 50 percent last quarter) was like an early Christmas for the various varieties of EV-haters.
For most of us in the EV industry, it was more like a visit from the Grinch. But there’s one group of EV-related businesses that may be okay with the slower-growth scenario: battery makers.
The Inflation Reduction Act set off an avalanche of investment, and the lion’s share of that has gone to the battery sector. According to Wellesley College Professor Jay Turner, who maintains an EV-investment database (via E&E News), investors have poured $58 billion into battery projects in the year since the IRA became law, and some believe a more measured pace would be healthier for the industry in the long run.
“A slower pace of demand for battery materials is actually positive for the effort to build up a secure supply chain outside of China,” Ben Steinberg, a spokesperson for the Battery Materials & Technology Coalition trade group, told E&E News. “It allows a bit of breathing room for new production to come online at a normal speed that allows project developers to better control cost. Building things domestically at breakneck speed inevitably means higher costs.”
Demand for batteries has outstripped what materials suppliers can realistically supply, Celina Mikolajczak, Chief Battery Technology Officer at graphene supplier Lyten, told E&E News. Automakers are “scaling back their plans to the reality of what can be done, rather than what everyone in the world would like to be done. The fact that the demand is down means maybe we can take a breath for a minute.”
While pessimistic sales outlooks at Ford, GM and others have been generating headlines, the overall picture is more complex. Hyundai, Volvo and BMW report that their EV sales are humming along nicely, thank you. And even perennial EV laggard Toyota seems to be forging ahead—it recently announced $8 billion in additional investment in a North Carolina battery factory, more than doubling total investment at the plant.
EV demand may fluctuate from one quarter to the next, but players further up the supply chain have much longer timelines. Spurred by the IRA, mining firms are in the early stages of establishing new mines for critical minerals such as lithium, graphite and nickel. It can take a decade to bring a mine into new production, and a sales slowdown could complicate long-term planning.
“The industry is desperate for new mines and supply chains to be built to help scale the critical minerals, and keep the price of the battery on its present falling trend,” Simon Moores, the CEO of Benchmark Mineral Intelligence, told E&E. “The biggest thing a slowdown in rate of [EV sales growth] will impact is funding. If the funding slows, the industry falls back into the same problems it had in the last phase of growth.”
However, some in the mining industry also seem to welcome a pause from the current rush.
A more moderate rate of growth “means we have some time to focus on building up domestic battery manufacturing and secure supply of raw materials like nickel from our own reserves and allies like Australia, Canada, South Korea, Chile and Japan,” said Todd Malan, Chief External Affairs Officer for Talon Metals, which has a nickel mining joint venture with Rio Tinto in Minnesota, and recently scored a $115-million federal grant to build a nickel-processing plant in North Dakota. “A little breathing room for investment, permitting and construction of the secure battery supply chain outside China is constructive.”
Source: E&E News