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IEA Report: Global Supply Chains of EV Batteries

1. Executive Summary

• Electric vehicle (EV) battery demand surged globally in 2021, driven by record sales and falling battery costs.
• China dominates the EV battery supply chain (76% of production capacity by 2030), but diversification is underway in Europe, US, and other regions.
• Critical minerals (lithium, nickel, cobalt) remain geographically concentrated, with China controlling most downstream processing.
• Investment bottlenecks and long lead times (5-20 years for new mines) threaten supply in the face of booming EV demand.
• Battery metal prices rose sharply in 2022 due to increased demand and investment constraints, particularly affecting lithium.

2. Global Supply Chains and Geographical Distribution

• Battery Supply Chain Structure:
  • Raw material extraction → Material processing → Cell component production → Battery cell production → EV assembly
  • Each stage has distinct geographical distribution and concentration:
  • Lithium Mining: Australia, Chile, China, Argentina (two main types: brine and hard rock deposits)
  • Cobalt Mining: DRC (70% production) and Glencore, with artisanal/mining accounting for 10-20% production.
  • Nickel Mining: Indonesia (major laterite producer), Russia (20% Class 1 battery-grade nickel production), Australia.
  • Graphite Production: China dominates via a closed domestic supply chain (primarily synthetic production).

3. Supply Chain Disruptions and Key Challenges

• War in Ukraine: Disrupted metals supply, spiking nickel prices, which can reach $100,000/tonne.
• Revenue Potential: Battery demand could increase 6x by 2030 under aggressive policies, while total battery metals demand could rise by up to 7x.
• Lead Times: Expanding capacity requires 5-20 years for mines, 2-4 years for battery factories, risking market shortages.
• Economic Cost: Battery price sensitivity varies by chemistry, with LFP chemistry less sensitive to manufacturing capacity.
• Environmental Impact: High pollution during copper/nickel smelting; recycling remains limited.

4. Policy Implications and Strategic Measures

• Diversification: For critical materials (lithium, nickel) to EV batteries, countries are pursuing geological surveys and joint ventures.
• Investment Prioritization: EU via Critical Raw Materials Strategy focuses on processing capacity and R&D.
• Recycling Potential: By 2030, recycling could meet 20% of battery metal demand for cobalt but less for lithium, highlighting supply chain vulnerabilities.

5. Policy Recommendations

• Governments must incentivize downstream processing and export diversification to reduce reliance on China (esp. for battery value-added activities).
• Standardize critical mineral reserves data, especially in DRC, to better predict future supply.
• Advance battery chemistry innovation (e.g., LFP, solid-state batteries) to substitute for scarce metals (cobalt).

6. Technology and Innovation

• Alternative technologies like sodium-ion (Na-ion) batteries are emerging, offering lower cost and less reliance and on lithium. Vehicles using Na-ion could enter the market within 1 to 3 years.

7. Supply Chain Resilience

• Battery demand can meet stated policy goals with current supply but requires major investments in critical minerals under more ambitious scenarios (Announced Pledges Scenario), particularly for lithium (significantly higher demand than projected supply by 2030 under NZE).