The future of electric vehicles is in our supply chains
Electric vehicles (EVs) are proving to be the most popular replacement for fossil fuel cars. So much so that by 2030 electric vehicles will represent over 60% of vehicles sold globally.
Yet the pressure’s on to accelerate and increase this number. With nations across the world looking to eradicate fossil fuel vehicles entirely by 2030, we need to understand how to quickly adapt the automotive supply chain and make EVs viable for consumers everywhere.
Fuelling The Charge
At the heart of every EV is a battery traditionally made of metals such as cobalt, nickel and lithium. With nearly 10% of global car sales now electric, four times their market share in 2019, the need for these key metals is rising, putting pressure on existing mines around the world to meet demand.
This is to be expected – but it has also brought up two big challenges.
The first is cost; as we ramp up EV production, more manufacturers will be drawing from finite metal resources which will drive up prices. In the past year alone, the cost of nickel reached record levels, causing the London Metal Exchange to temporarily close trading for the commodity.
On the flip side, there is also the question of environmental and social governance (ESG).
For EVs to be a truly sustainable, cost-effective option for society, the ways in which their materials are sourced must be done conscientiously. Improvements to the environmental impact of such work is an area that is being heavily invested in already. However, the broader issue is that there are currently very few regions where manufacturers can source these metals from. China and Africa are home to some of the largest metal mines but the workers’ rights in many of these areas are not always in accordance with the standards of first-world economies. So, until these regions improve conditions – or until manufacturers can fund and find alternative mines – the cost and supply of EVs need to be realistically managed.
Diversifying the regions we depend on for metals will have the added benefit of stabilising the EV supply chain. As we’ve witnessed since the COVID-19 pandemic, global supply chains can be stymied by overreliance on a small number of regions to provide materials or manufacturing expertise. For example, the conflict in Europe is currently threatening the world’s supply of nickel – an essential battery metal.
So, as manufacturers work with logistics specialists to diversify the transport options for overall trade, they must also invest in finding new metal sources to both protect the industry from future geopolitical turmoil, meet the rising ESG expectations of partners and customers alike, and manage price fluctuation.
Collaborating To Succeed
To help EVs thrive, infrastructural improvements to charging sites and better supporting our current supply chains are a must. But the automotive sector can’t do this alone.
Private and public sector collaboration is fundamental to the success of global EV rollout. From a consumer perspective, for example, EV charging infrastructure should enable rather than hinder their decision to invest in these vehicles. While there are currently 29,600 public charge points serving 750,000 EVs in the UK for example – a sufficient level compared to the nation’s existing fossil fuel infrastructure – more work is needed in terms of personal charging facilities among other factors. For mutual benefit, governments must empower manufacturers and their energy partners in implementing charging networks at scale.
Implementing more agile technology to sustain EV demand worldwide is also essential. For example, EVs currently need to be shipped independently of their batteries due to the increased fire risk of moving batteries en-masse. Fast forward to a world where we are only shipping EVs, and we are looking at potentially doubling the number of vessels needed to ship vehicles compared to the fossil fuel era. Therefore, our ports and terminals need to boost capacity.
Technological advancement has provided a quick-fix solution to this issue in some markets already. DP World ATI Batangas terminal in the Philippines – a vital link in the Asian automotive supply chain – now has a throughput capacity of over 450,000 TEU annually thanks to its terminal operating software, which identifies and enforces efficient capacity utilisation amongst other things. If EVs and their batteries need to be shipped separately for the long term, this tech should be rolled out globally to enable all markets to transition quickly.
While the world’s ports adapt to better aid the movement of these goods, they also need to evolve in the services they provide. The skills needed to assess fossil fuel vehicles at terminals differ wildly from those needed for EVs, which are mechanically simpler but technologically more complex. Add to this the facilities required to maintain the vehicles during transit – such as battery pools to safely store spent or damaged batteries – and you start to get an idea of the knowledge and equipment required to enable this new age of transport.
Embracing The Future
All these considerations may seem like a lot of work – but in reality, they should be viewed as a list of opportunities. Across sectors and governments, we have it within our combined power to enable a greener era for transport. And an accessible one at that.
To prepare ourselves for this transition, we need to start investing in the next generation, promoting STEM education to upskill future workforces. Technology such as artificial intelligence that can automate our ports is also crucial as we accelerate the shift from fossil to electric. Further, with an acute focus on all things ESG, the way in which we sustain this new era for the automotive sector will hopefully empower the world’s least developed countries while enabling more people to choose sustainable cars.
Already, this drive to make EVs successful is changing what’s possible in terms of sustainability. Manufacturers are exploring the potential circularity of electric vehicle batteries, breaking them down to their original materials to be upcycled as future batteries . Elsewhere, EV leaders are reimagining the role of manufacturers in the drive for sustainability. Talking about Tesla, Elon Musk has referred to ‘machines to make machines’, utilising technology to bring more of the battery and manufacturing process in-house for more efficient, cleaner and cost-effective EV production.
Through their use and production, EVs have the potential to transform the automotive sector and our world – in more ways than simply reducing carbon emissions. If we transition strategically, we can ensure the benefits can be enjoyed by all for generations to come.