Supply-demand imbalance looms for critical battery raw materials by 2030: McKinsey
Ensuring a reliable supply of critical battery raw materials will be crucial to the global push to net-zero, especially with demand for battery electric vehicles picking up pace towards the end of this decade, a new report by McKinsey finds.
By 2030, McKinsey estimates that worldwide demand for passenger cars in the BEV segment will grow sixfold from 2021 through 2030, with annual unit sales increasing to roughly 28 million from 4.5 million during that period.
Such a projection, the consultancy says, means that the industry is “likely to confront persistent long-term challenges” in keeping with demand.
In particular, its reports highlights that automotive OEMs are giving more attention to reducing Scope 3 emissions from material usage, which contribute a large portion of what batteries emit.
As a result, battery materials sourcing has become ever more important for battery producers.
Based on the latest estimates, McKinsey’s analysis projects that demand will outpace base-case supply for certain materials, requiring additional investment and leading to fear of shortages and price volatility, among other challenges.
Supply shortages looming
Based on current market observations, battery manufacturers can expect challenges securing supply of several essential battery raw materials by 2030, McKinsey’s report finds.
Battery makers use more than 80% of all lithium that is mined today, and that share could grow to 95% by 2030.
With technological advancements shifting in favor of lithium-heavy batteries, lithium mining will need to increase substantially to meet 2030 demand, McKinsey says.
For nickel, fears of a shortage prompted by the shift to BEVs have already triggered significant investments in new mines, particularly in Southeast Asia, but even more supply will need to be brought online.
McKinsey’s report suggests the possibility of a slight shortage in 2030 as the battery sector continues to vie with steel and other sectors for Class 1 nickel.
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Food for thought
HNY 2025
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Frank
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