Automotive manufacturing supply chain pressure beginning to ease

• • Automotive battery chemistry production forecast provided for the first time
  • Supply chain forecast timeline is shifted to 2027 and 2030
  • Impact of Inflation Reduction Act starting to be seen in European supply chain forecast
  • First look at lithium demand for 2035
  • Recycling from portable electronics, such as laptops, phones, and e–cigarettes analysed for potential lithium extraction

03 April 2023 

Supply chain issues that have beleaguered automotive manufacturers for the past 18 months finally look to be easing, however investment in analogue electronics (chips) supply chain is not keeping pace with automotive industry growth, suggests analysis from the latest Advanced Propulsion Centre UK (APC) quarterly demand report. The regularly produced demand reports track trends in the automotive industry with forecasting made based on extensive industry-led research. Analogue electronics (chips) are particularly important as there are hundreds in any one vehicle and they are used for the infotainment system, engine management, advanced driver assist systems, auto-wipers and more. 

Availability of lithium continues to be a primary concern for the automotive industry. This report details factors that are likely to come into effect which will lift pressures on lithium availability. However, it is not until 2035 that activity such as battery recycling could make a significant impact, and this also could vary if the current trend for keeping cars for longer continues. The report models three scenarios based on car ownership of 10, 12 or 15 years.  

Dr Chris Jones, Strategic Trends Manager at the APC, said:

“Looking at what is happening globally helps us to assess the opportunities available to extract lithium from recycling activity. Removing lithium from automotive batteries is not an easy task and work needs to be done to improve how we do this safely, ready for when we do have considerable quantities that require recycling. As extracting lithium from auto-batteries is not something that we will really see at scale until 2035, we need to look at other sources. One solution is lithium from portable electronic devices. The EU already has a target of collecting 73 percent of its portable electronics for recycling by 2031 and here in the UK, DEFRA is currently consulting on this. Recycling of portable electronics, such as laptops, phones, and e-cigarettes, could have a significant impact on lithium availability if collection rates can be improved.” 

With Europe set to require between 500-600 kilo tonnes of lithium by 2030, and global supply anticipated to be around 1000-2000 kilo tonnes, it is clear that recycling needs to be addressed seriously to help meet demand. Dr Jones adds: “We can also take into consideration the scrap from gigafactories as this will provide a boost to available supply and is likely to be the primary source of lithium available via recycling until at least 2035 when end-of-life batteries will play a bigger part.” 

The demand report also highlights three factors which will help reduce reliance on lithium for light duty vehicles, particularly in the UK: 

• an increase in the manufacture of hydrogen fuel cell vehicles (FCEVs), mainly in SUVs and vans 
• the global trend of manufacturing smaller batteries 
• automotive manufacturers considering alternative chemistries for different vehicle segments 

Dr Hadi Moztarzadeh, Head of Technology Trends, comments:

“This latest report sees a slight increase in forecasted FCEV production in the UK. It will reduce the need to rely on lithium. In particular, we will see manufacturers of larger SUVs and vans opting for hydrogen fuel cell powertrains which, as volume grows, will be more cost effective and offer the longer range that is required of these vehicles. There is also the possibility for auto-manufacturers to future-proof these vehicles with modular platforms meaning they can swap out battery or fuel cell powertrains on the same assembly line offering a versatile approach. These vehicles, because of their size, could accommodate this approach.” 

He continues: “We forecast that the UK will lead the way with nearly 6 percent of light-duty vehicles (passenger cars and vans) manufactured with a hydrogen fuel cell powertrain, slightly higher than global and Europe’s share of hydrogen FCEV. We also forecast the manufacture of petrol and diesel vehicles to be as low as 12 percent of the UK’s total auto manufacture to meet export demand.” 

It is clear there remains some uncertainty for lithium supply as the transition to clean powertrains continues to accelerate, with considerable R&D into recycling and lithium extraction from existing stock still needed. However, there are options that can feed into the supply chain, these would benefit the investment and standardisation that needs to be adopted on a global scale. There is already some great work underway in the UK, including a project partly funded by the APC’s Automotive Transformation Fund (ATF) for a six-month feasibility study led by Altilium Metals focusing on processing end-of-life batteries and reintroducing them back into the supply chain at scale. Another example is the RECOVAS project which will introduce a new circular supply chain for electric vehicle batteries in the UK, by developing the infrastructure to collect and recycle electric vehicles and their batteries. 

APC is the organisation tasked by the UK government and automotive industry to accelerate the transition to low-carbon transport solutions. It uses its unique insight, gained from working closely with the global automotive industry, to provide insight and forecasting to support government with strategic policy decisions and to provide clarity to the industry about the projected demand, product, and technology roadmaps.