The global shift to electric vehicles (EVs) is accelerating, but McKinsey’s latest report warns of significant strain on the supply chain for critical battery materials by 2030.
EV sales are expected to jump from 4.5 million units in 2023 to 28 million annually by the end of the decade. This unprecedented demand will put pressure on the availability of essential materials like lithium, high-purity manganese, and graphite.
While lithium iron phosphate (LFP) batteries reduce reliance on scarcer materials like cobalt and nickel, they still depend heavily on lithium, manganese, and graphite. The shift to LFP batteries offers some relief but does not eliminate the imbalances in the supply chain, highlighting the need for continued focus on securing sustainable sources.
Adding to the challenge, upstream raw material mining and refining these materials account for about 40% of an EV battery’s total emissions. McKinsey’s report emphasizes that reducing emissions in these processes is critical.
“Sourcing materials from supplies committed to low-emission fuels and power sources could cut emissions by as much as 80% in mining and refining phases. This needs to be paired with a strong focus on cost reduction given the current profitability pressure in the battery industry,” said Raphael Rettig, partner at McKinsey.
Smaller but essential materials, such as high-purity manganese, also face growing challenges. Currently, manganese contributes around 4% of emissions in a typical lithium-nickel-manganese-cobalt (LI-NMC) battery. However, as LFP batteries gain popularity and larger materials like lithium and nickel are decarbonized, manganese’s relative emissions intensity could nearly double without targeted strategies to address the imbalance.
Top comment by Aigars Mahinovs
Luckily there are several new batterie technologies reaching production levels before 2030 including multiple solid state formulations that use different materials. And there are several test plants already active for lithium recovery from goethermal water sources, including local sources in Europe and Americas.
Toyota’s recent $4.5 million grant from the US Department of Energy to develop more sustainable EV batteries is a step toward addressing these challenges. However, it’s clear that solving the broader supply chain issues will require a collective effort from the entire industry to balance demand with sustainable practices and minimize emissions. The path forward will define the EV industry’s ability to meet climate goals while scaling up production.
Read more: Toyota gets $4.5M DOE grant to boost EV battery sustainability
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