In the midst of heated debates and divisions among leading auto manufacturers over Australia’s new emissions control laws, a deeper divide is emerging regarding electric vehicle (EV) technology. This clash could significantly shape the trajectory of our growing quest for critical minerals. But let’s delve into that a bit later.
As we transition to an electric future in its early stages, the methods for achieving this goal are expected to evolve rapidly as technology advances.
The debate over whether hydrogen or battery power will dominate our future energy needs is ongoing. Various materials and technologies are competing for supremacy within the realm of batteries.
It’s improbable that one single technology will emerge as the ultimate solution. It’s conceivable that hydrogen might power larger vehicles, ships, and aircraft, while batteries could be better suited for passenger vehicles.
However, the recent drop in critical mineral prices has served as a wake-up call. It has challenged the assumptions that lithium, nickel, and cobalt would reign supreme in the future and that the transition to a lower emissions future would be straightforward.
An interesting shift occurred late last year in the United States. Consumers started losing interest in electric vehicles and instead began turning to hybrids, which combine petrol-powered engines with electric motors.
This trend, which began around this time last year, accelerated towards the end of 2023, as indicated by a graph from investment bank Morgan Stanley. While electric vehicles had initially shown significant growth at the beginning of the year, hybrids experienced a resurgence, surpassing them in sales by March and continuing to do so throughout the year.
The surge in hybrid sales in the US, reaching a record one million units last year, indicates a 76 percent increase from the previous year. This shift has prompted major producers to reconsider their plans for full conversion to battery power or contemplate a longer-term transition to hybrids.
Ford is considering a significant ramp-up in hybrid production. General Motors, which had abandoned hybrids in favour of battery-powered electrics five years ago, is now reconsidering its hybrid technology.
Both Detroit giants are in a dilemma: Tesla, still the world’s largest producer of electric vehicles, and Toyota, which has chosen to maintain internal combustion engines through hybrids or hydrogen.
The shift back to hybrids has yet to gain traction in Europe or China, but if it becomes entrenched, even just in the US, it could disrupt projections of medium-term demand for minerals essential for battery production—or it could accelerate innovation in battery design and production.
When it comes to electric vehicles, Tesla remains a dominant force, although its grip on the market is slipping. It still holds the title of the largest manufacturer of battery-powered cars globally, albeit narrowly. In January, it accounted for 17 percent of global sales, closely followed by Chinese giant BYD with 16 percent and GM in a distant third with 7 percent.
Despite stagnation in the US market, global sales of electric vehicles continue to soar, with a 55 percent increase in January compared to the previous year. China leads in demand, followed by Europe, with the US lagging behind in third place. Tesla maintains a dominant sales position in each region.
However, Tesla’s CEO Elon Musk is feeling the pressure. The company’s stock price has dropped significantly from its 2021 peak, impacting Musk’s personal wealth. Production delays, chip shortages, and increased competition have forced Tesla to slash vehicle prices throughout 2023, squeezing margins and earnings.
Moreover, the resurgence of hybrids in the US market has compelled Musk to reconsider his strategies. Transportation accounts for a significant portion of Australia’s carbon emissions, prompting recent changes to emissions standards that directly align with the Morrison government’s climate commitments. This has led to divisions within Australia’s automotive lobby.
In addition, there’s a growing campaign against electric vehicles in some media circles, arguing that their production requires substantial energy-intensive materials and may not be as environmentally friendly as claimed.
While these arguments have merit, they overlook a crucial fact: electric vehicles do not emit carbon dioxide, a major contributor to climate change. And as the grid becomes less reliant on coal-fired electricity generation, emissions from transportation and energy production will gradually decrease.
Not all batteries are created equal. Lithium-ion and lithium-ferrous-phosphate are the two main types, each with variations in composition and performance.
The lithium-ferrous-phosphate (LFP) battery, gaining momentum since 2021, offers advantages such as affordability, longevity, and lower fire risk. Importantly, it does not contain cobalt, nickel, or manganese, which are critical minerals often associated with environmental and ethical concerns.
The rapid evolution of battery technology, particularly the potential rise of solid-state batteries, poses a significant challenge to the future of critical minerals. These batteries, expected to be lighter, longer-lasting, and faster-charging, could revolutionise the industry by 2030, potentially altering the landscape of mineral demand entirely.
In conclusion, the future of electric vehicles and the critical minerals that power them is complex and evolving. While challenges and uncertainties persist, innovation and technological advancements offer promising opportunities for a more sustainable and efficient transportation sector.
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