The UK’s commitment to green strategy has been increasingly visible in recent government legislation, with the decision to ban the sale of new petrol- or diesel-powered vehicles by 2030 lauded by many as the right form of affirmative action against the climate crisis. But just after the global automotive industry was rocked by a shortage of crucial components, another chink in its armour is being revealed – by the very endeavours that aim to ensure their longevity in a greener world.
The Automotive Industry in 2022
In the last few years, the UK’s automotive industry has experienced significant difficulties, caused or compounded by the global coronavirus pandemic and resulting restrictions. A global microchip shortage that began in 2020 resulted in a significant shortage in the manufacture of new vehicles.
This shortage had a knock-on effect on the second-hand car market, seeing the value of used vehicles increase by the highest percentage in recent history. Increased costs saw an increase in interest in gap insurance, as buyers sought to protect their investments and cover the full value of the cars they were purchasing.
In 2022, second-hand car prices have begun to settle, as production of new vehicles has begun to ramp up once again. The microchip shortage is ongoing, but solutions have been found by many manufacturers and chip availability is continuing to increase apace. However, there is a new weak point on the horizon for the automotive industry, heralded by the increased demand for, and production of, electric vehicles.
The Lithium Supply
The increased manufacture of electric vehicles has seen a sympathetic increase in demand for vehicle battery packs, the majority of which are lithium-ion cells. The dramatic increase in production of these cells has illuminated a new potential weakness in the automotive supply chain, in the form of the availability of lithium.
Demand for the element has seen its market value increase sixfold since 2017, resulting in significant additional costs to manufacturers. There are also a limited number of lithium mines – and with plans for new mines in Serbia scrapped by the government, there is a multi-national push for an increase in lithium mining, and a ‘gold rush’ of start-ups and government agencies seeking to kick-start their own mining operations.
Difficulties in Addressing the Lithium Shortage
But mining lithium is a complicated and time-consuming process, meaning that lithium shortages could negatively impact vehicle production for years to come. A lot is riding on the increase of access to lithium, with many governments having committed to a net-zero society by 2050 – necessitating the swift and consistent building of electric vehicles to replace gas-guzzlers.
As it stands, the majority of the automotive industry’s lithium is sourced via China and Australia. In the UK, a rich seam of lithium-enriched granite exists in Cornwall, with British Lithium hoping to expand a pilot scheme for its extraction in the coming years.