Resource Management And Charging Infrastructure Pose Roadblocks To The EV Transition

Perhaps no invention has singularly affected transportation around the world as the invention of the internal combustion engine in the 19th century. Internal combustion engines (ICEs) have powered almost all of the cars, planes, and boats made in modern times.

But put simply, the internal combustion engines that we have relied on for well over a century are highly inefficient. Most of the energy they consume is wasted as heat (which you can feel radiating from under the hood of the car). And with few exceptions, that wasted heat can't be recaptured. The result is that if you drive an ICE car, your overall efficiency hovers around 20%.

One of the biggest advantages of electric vehicles comes down to how EV technology compares to ICE technology. EVs are mechanically simpler and more efficient. Plus, braking actually adds energy rather than subtracting it. Braking can turn the rotor and allow electricity to be fed back to the battery in a process known as regenerative braking. As a result, about nine-tenths of the energy fed to an EV helps it move.

This is monumentally better than any ICE could achieve. It means that as EV adoption grows, energy demand for our collective transportation needs will decline even if we don't drive less. That being said, the road to a future dominated by EVs isn't entirely smooth.

A transition this fast and this global for a technology as fundamental as the automobile has never really been done before. Nonetheless, a combination of innovation and policy can bolster the ongoing EV revolution.

Challenge: Careful Resource Management

The EV transition is undoubtedly in full swing. Bloomberg expects annual plug-in vehicle sales to rise from 6.6 million in 2021 to 20.6 million in 2025, at which point they will make up nearly a quarter of new passenger vehicle sales globally. Three-quarters of those will be fully electric. This is one of the fastest and largest shifts in any global market - auto-related or otherwise - in modern times, and the stakes are high.

EVs present their own technical challenges that automakers must overcome if they are to meet surging demand. Drivers will expect many of the same benefits seen as commonplace to fossil fuel-powered vehicles: affordability, long driving range, and fast charging/filling speeds.

Whereas gas-powered vehicles require a series of complex internal systems (such as exhausts, fuel injectors, and transmissions), an EV needs one above all else to work well: the battery. Batteries are expensive and complex. Their cost accounts for a substantial portion of an EV's production cost (typically about a third), and their production requires specialized materials and chemicals whose supply is limited.

While fossil fuels provide stored energy that can be burned on demand, electricity for use in an EV must be converted into another force to be saved for later use, necessitating ample battery storage that can modulate variability of supply and demand. This will strain a scarce supply of batteries and the minerals needed to make them.

In fact, EVs require about six times the mineral inputs of conventional cars and more integrated circuits, a shortage of which is already forcing automakers to reduce the production of gas-powered vehicles.

The most common EV battery technology is lithium-ion batteries. The electrons in such batteries are stored almost exclusively in the graphite located in the anode electrodes of the battery cells. Each electron is paired with a lithium-ion (hence the name of this technology) until released during driving.

Clearly, lithium and graphite are essential building blocks of most EV batteries. There are three other key minerals in lithium-ion EV batteries: cobalt, manganese, and nickel. Cobalt, the most expensive battery metal, inhibits overheating and also extends the battery's useful life. Manganese helps reduce battery charging time and lengthen battery lifespan. Finally, nickel allows for more battery range relative to mass.

In general, supplies of these minerals are concentrated in a few countries such as Chile, Australia, and certain African countries. Ultimately, these critical supply chains are mostly controlled by China. Many automakers have looked to control their supply chains to reduce their dependence on other companies or countries. But for automakers who have built sprawling businesses on fossil fuels for over a century, this won't be easy.

Like in other commodity markets, prices for these so-called strategic metals rise and fall wildly, making it hard for automakers to meet demand at steady prices. Furthermore, EVs don't only face competition from other EVs. The same minerals used in their production are used in many other technologies, especially smartphones. An EV can use up to 10,000 times as much lithium, for example, as a single smartphone and 300 times as much cobalt.

But in the end, the question with these precious metals is not whether there are enough of them to meet surging demand. What remains to be seen is whether they will be sourced sustainably, responsibly, and in time to meet that demand.

‍

Solution: Battery Innovation

As with any industry that depends on finite resources, resource management will be a continuing challenge to the EV revolution. But battery innovation promises to solve many of these obstacles and make the EV industry more viable in the long run.

Many major automakers are banking on full-scale changes in how batteries are constructed, not just changing their ingredients. Solid-state batteries don't require a liquid electrolyte to allow electricity to flow between different components. They're commercially viable in many industries but not in EVs just yet. The technology isn't expected to be broadly available in the EV space until the end of this decade, if not later, but it could lead to lighter, faster-charging batteries that store more energy and are far less likely to ignite than today's lithium-ion batteries.

Beyond changes to battery construction, applying circular economy principles to EV batteries may present the greatest potential to revolutionize how batteries are made, used, and reused in and beyond the EV market.

At some point, every battery—whether it's in your smartphone or in a car—loses its capacity to the point that the device becomes unusable. But the battery itself can be reused. Old EV batteries can be combined and converted into stationary power storage units. This saves ongoing greenhouse gas emissions while potentially giving EV drivers financial remuneration at the end of a battery's useful life.

And there's another way to innovate at the end of life for batteries: modular battery design. Every EV battery contains a select few key components: the cathode, anode, separator, cooling system, fuses, assembly hardware, and so on. These all have different lifespans, but since most batteries are glued or welded together, each battery is only as strong as its weakest link. One component failure can ruin the whole system.

Modular battery design would mitigate the need to bond components, making it easier to disassemble a battery pack. That way, if only one or two parts need to be serviced, a battery can be repaired cost-effectively. If the battery is deemed unrecoverable, each of its components can be reused rather than contributing to a massive ongoing electronic waste crisis.

But above all, the Holy Grail of innovation in the EV space is battery recycling. There are two main families of battery recycling processes which are used separately or sometimes in combination to recycle a battery. One is pyrometallurgy, which basically burns the organic and plastic components and leaves only the metal components, which are then separated by chemical processes. The other is hydrometallurgy, which separates a battery's components only by different baths of solutions that are chemically adapted to each battery.

Both pyrometallurgy and hydrometallurgy are used to recycle smartphone and laptop lithium-ion batteries for smartphones and laptops. The cobalt in those batteries is so valuable that recovering it alone ensures the profitability of recycling lithium-ion batteries. But unlike batteries for consumer electronics, not all EV lithium-ion batteries contain cobalt. Thus, the economic viability of battery recycling isn't as clear-cut for EV batteries. Furthermore, the industrial-scale process to recycle EV batteries hasn't really been developed, mostly because there haven't been enough EV batteries to date for this process to be economically worthwhile.

For a long time, there have been concerns that the difficulties of recycling EV batteries would lead to a surplus of 'spent' EV batteries that could not be reused for any purpose. But advances in EV recycling have allayed those concerns. Today, the prevailing industry belief is that most EV batteries will outlast the vehicles they are installed in, meaning most EVs will go bad for reasons unrelated to the battery.

Furthermore, these EV batteries are expected to have a worthwhile second life before they need to be stripped down for recycling. And as the EV transition continues, battery recycling will industrialize, making it viable both for automakers to produce cars more efficiently and for drivers.

How Norway Grabbed The EV Baton

You might know the band A-ha for its popular 1980s hit, "Take on Me." What you might not know is that the brand's frontman, Morten Harket, jumpstarted an EV revolution in his home country of Norway. Harket, along with Frederic Hauge, the president of a Norwegian environmental group, drove an electric Fiat imported from Switzerland around Oslo, Norway's capital, in 1989. Harket and Hauge refused to pay road tolls, parked illegally, drove through bus lanes, and overall refused every policy notice they were given. Their Fiat was impounded and auctioned to cover their fines, but this bold act of defiance drew attention that reflected itself in the policies Norway would soon adopt to incentivize EVs.

Norway introduced purchasing incentives for EVs in the early 1990s, long before EVs had any sort of mass market. And over the last few decades, the country has enacted a series of EV-friendly policies intended to boost demand. Norway lowered registration taxes on EVs to keep their effective purchase price down and even exempted EV drivers from paying some road tolls as an extra incentive. EV drivers were given cheaper public parking, free access to road ferries, and allowed partial access to bus lanes. Value-added taxes on EVs were also eliminated. In contrast, taxes on the sale of new polluting cars are quite high, which helps the country subsidize the purchase of new EVs substantially (often up to a third of an EV's sticker price).

Norway also built up its EV charging infrastructure to support this transition. There are more than 15,000 public charging points in Norway today. Relative to the country's population, Norway has eight times as many public chargers as the norm across the European Union. And several Norwegian municipalities have rolled out grant schemes to support charging stations in housing cooperatives.

The results have been exceptional. Almost two-thirds of new passenger cars sold in Norway in 2021 were electric. Ten years prior, that proportion had been just 1%. Today, one-sixth of Norway's entire car fleet is made up of EVs. Norway's goal is to have 100% zero-emission sales of new cars by 2025. This might seem ambitious, but a combination of market trends and government policies means achieving the goal is quite possible.

One big takeaway from Norway's EV revolution is that government policy can stimulate both supply and demand, creating a virtuous and self-sustaining cycle that, in Norway's case, has led to practically unparalleled EV adoption. Government incentives can spur innovation and job growth, both of which benefit supply. Incentives can also directly spur consumer demand by correcting for what the market might not capture: the massive indirect costs associated with greenhouse gas pollution.

It's important to keep in mind that, all things considered, you wouldn't peg Norway as the most likely cradle of EV adoption. The country is infamously a major producer of fossil fuels, and it uses surplus money generated from fossil fuels to bankroll the world's sovereign wealth fund, which was worth about $250,000 per Norwegian citizen at the end of 2021.

And the country's geography doesn't exactly suit EV adoption. It's cold and heavily rural, reflecting some traditional barriers to EV adoption: lack of range and poor performance in cold weather. But as is often the case, an act of defiance sparked a revolution that has made Norway an unlikely leader in EV market share.  

While market trends alone are currently supercharging a global EV revolution, the pace of climate change and the sheer dominance of the internal combustion engine requires help from governments around the world to ensure the EV revolution is both expeditious and equitable. Legislation like the recently passed Inflation Reduction Act in the United States is needed to further incentivize automakers to make cutting-edge affordable EVs and compel consumers to make the leap from internal combustion engines to electric motors.