Editorial Feature

Electric Vehicle Market: Is Lithium the New Oil?

For over a century, the world was powered by hydrocarbons mainly from fossil fuels. These fossil fuels have been the source of energy for vehicles, power plants, and generators. With increasing environmental impacts such as global warming and climate change as a result of emissions from the burning of fossils, it has been realized that newer and cleaner forms of energy will have to be adopted to control or mitigate the damage that has been caused by fossil fuels.

lithium oil

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Some of the cleaner forms of energy that have been introduced are solar, tidal, wind, use of biodiesel, and electric cars. All these sources of energy are considered renewable forms of energy. Lithium-powered batteries used in electric cars have proven to be a potential replacement for fossil-powered vehicles because of the high power output and efficient storage of energy. This has made many electric car manufacturers acquire more of the metal from all around the world.

Worldwide Electric Vehicle Use

More governments today are working towards creating new legislation and regulations for pollution and emission reduction. This has made electric and hybrid cars more popular than ever. Statistics show that about 450,900 hybrid cars were sold in 2020, a trend that is not likely to slow down as more people are becoming environmentally conscious.

The United States is not the only country that is making significant strides in favoring electric and hybrid cars. Many other countries are implementing new regulations and policies that will benefit the environment.

The German government has mandated that by the year 2030, all new cars will need to be emission-free. Norway is working towards ambitious legislation and policies which aim to ban the sale of gasoline-powered cars by 2025.

The United Kingdom has set goals that are also in line with setting policies and regulations that are aimed at benefiting the environment. Lithium-powered public transport has been introduced by the Chinese government to help control pollution in China and set good examples for other countries.

It is therefore evident that governments worldwide are in the quest of making regulations to enforce the purchase and use of electric vehicles. Many governments support their people who own electric cars. This is in an effort to help reduce the carbon footprint as a result of using fossil-powered vehicles.

Other Uses of Lithium

Aside from powering electric vehicles, lithium has also been used in devices such as smartphones, laptops, and tablets. The lithium batteries have made it possible to use different devices even when they are not connected to electric sockets continuously throughout the day before requiring a recharge.

Some companies have made significant strides to improve and perfect the lithium-ion battery used in different handheld devices by significantly increasing their power capacity relative to their sizes. Panasonic has revealed their new razor-thin silver wafer that is capable of being twisted a thousand times but still maintaining 80% of its initial capacity.

The Demand for Electric Vehicles and Some Trade Challenges Involved in Lithium Trade

Ambitious plans for governments to decarbonize their economies through the introduction of electrical public transport systems as well as personal vehicles have been established. This will require a high demand and the supply of lithium in order for these goals to be achieved. For example, a single Tesla Model S uses 140 pounds (63.5kg) of lithium, which is approximately the same amount that is needed to produce about 10,000 cell phones.

Despite the huge demand for lithium for electric vehicles, lithium producers have been reluctant to ramp up their production too quickly; this helps avoid a repetition of what happened between 2015-2018 in which the producers tripled their production to meet the increasing demand for lithium but produced an excess of the metal which sent its price plummeting to 80%.

These lower profits also caused mining companies' stocks to tumble as well. To prevent this from happening, lithium producers consequently reduced their output in 2020.

The Future of Lithium Production

Commercially, lithium is mainly obtained from either mineral ore deposits or underground brine deposits. A handful of large lithium projects are responsible for the current production of lithium. These include five mineral operations that are located in Australia, two brine and one mineral operation in China, and two brine operations in Chile and Argentina.

With an increased demand for lithium, new lithium projects are now proliferating in countries that have been sitting on significant reserves and resources of the popular metal. These countries include the US, Zimbabwe, Canada, Portugal, Spain, Finland, and Australia.

Due to electric car use, lithium demand is increasing and is going to be profitable in the next few years, helping to combat pollution emissions and climate change.

References and Further Reading

Treadgold, T., 2021. Copper And Lithium Compete For The Title Of ‘New Oil’. [online] Forbes. Available at: https://www.forbes.com/sites/timtreadgold/2021/04/23/copper-and-lithium-compete-for-the-title-of-new-oil/?sh=55ce1d21682d

Durkin, A., 2021. Lithium is ‘new oil’ as electric vehicle market expands. [online] Hinrich Foundation. Available at: https://www.hinrichfoundation.com/research/article/sustainable/lithium-new-oil-as-electric-vehicle-market-expands/

AmmPower. n.d. Lithium Market - AmmPower. [online] Available at: https://ammpower.com/lithium-market/

Wealthdaily.com. 2022. Lithium: The “New” Gasoline. [online] Available at: https://www.wealthdaily.com/report/lithium-the-new-gasoline/475

Disclaimer: The views expressed here are those of the author expressed in their private capacity and do not necessarily represent the views of AZoM.com Limited T/A AZoNetwork the owner and operator of this website. This disclaimer forms part of the Terms and conditions of use of this website.

Olivia Hudson

Written by

Olivia Hudson

Olivia has recently graduated with a double bachelor's degree in Civil Engineering and Business Management from the RMIT University in Australia. During her studies, she volunteered in Peru to construct wind turbines for local communities that did not have access to technology. This experience developed into an active interest and passion in discovering new advancements in materials and the construction industry.  

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