Category: Electric vehicle

The recent passing of the Inflation Reduction Act was touted as a significant step forward for reducing fossil fuel use and pushing the US to switch to electric vehicle (EV) technology. 

Sadly, the devil is in the details, and the details of this bill are not very good. The tax credit in the bill will be the current $7,500 credit extended to 2032, and an additional $4,000 added to that credit for a total of $11,500. The problem is that according to the Alliance of Automotive Innovation, around 70% of the electric hydrogen and hybrid vehicles currently being sold in the US would not be eligible for the credit because the bill states: to qualify for the credit, final assembly must take place in North America, and will hinge on the vehicle’s size, total cost, and potential buyers’ income.  

Before 2024, 40 percent or more of the critical minerals and half of the battery components must come from the US or a free trade partner to access the total credit. However, these vital materials are sourced globally. Most cobalt comes from the Democratic Republic of the Congo, and lithium is sourced from South America and Australia, with the processing of these materials taking place in China.

Assuming the California fossil fuel ban from 2030 happens, and other states follow suit, we must ask, are EVs more environmentally friendly to produce, and what will happen to all of these batteries once their time is up? The front end has an environmental impact from lithium mining, cobalt, and other essential metals like nickel. 

Let’s look at the contents of an electric vehicle battery, where they end up when their life is over, and ask if they are the best environmental choice. 

Can We Recycle Electric Vehicle Batteries?

Fortunately, EV batteries are highly recyclable. Cleantech company Li-cycle can extract and use over 95% of a lithium-ion battery’s components via a method called hydrometallurgy. Hydrometallurgy involves grinding the battery components up and running them through an acid solution.  

From there, several solvents and a series of electroplating rounds can pull the individual elements out of the solution. A simpler method of smelting is available, but requires more energy, and its results are less than impressive.

The resulting pollution caused by either method of battery recycling is negligible. However, the current problem is that there are insufficient recycling facilities operating at the required scale to process the increasing number of electric car batteries that are already coming to their end of life. 

As of 2022, a study from the Journal of the Indian Institute of Science found that in the US and EU, we are recycling less than 1% of the lithium-Ion we consume, which is down from a 2019 study that found global recycling of lithium-Ion batteries at about 5%. For comparison, we recycle about 99% of our lead-acid batteries used in vehicles and the power grid. 

The value of lithium, cobalt, and nickel is growing, and this study from the Clausthal University of Technology shows that recycling is economically viable. They state that process routes for cobalt, copper, and nickel achieve high yields, but lithium processing is more difficult and results in a lower yield albeit at a higher economic value.

Lithium Mining’s Environmental Impact

Lithium is a vital component of our modern batteries and plays an important role in battery chemistry, but it comprises only about 11% of a battery’s total mass. Most of the world’s lithium supply comes from Australia, Chile, and China, with the current global production of 500,000 metric tons of lithium carbonate equivalent (LCE) in 2021. 

McKinsey has estimated that this will grow with a sharp trajectory to between three and four million by 2030. In 2015, automotive needs ate up approximately 31% of the lithium supply, and this is expected to be the main user of the global supply going forward.

Lithium is extracted in two ways: from salt flats and hard rock mining. When the hard spodumene ore (a translucent, grayish-white aluminosilicate mineral and essential source of lithium) is mined, it is broken apart, separated, and acid washed, with the lithium sulfate eventually separated out from the rest of the mix. 

The hard rock process is economically cheap compared to salt flat processing, but the product is low grade. This standard mining method comes with the customary environmental risks of pollutants forming in tailing ponds. And because hard rock mining is labor intensive, this method produces about triple the emissions per ton of lithium than that shown with salt flats. 

The world’s largest lithium producer, Australia, has about 46% of the global lithium production and relies heavily on the hard rock mining method.  

Salt flats are formed when water is pumped underground, and on its return to the surface, brings with it dissolved minerals. The brine is spread across several pools to evaporate, and left behind are minerals to be separated and processed. 

Salt flat mining is common in the triangle that overlaps Argentina, Bolivia, and Chile. The nearby Andes Mountain range has created large subsurface lithium deposits due to geothermal activity, which leaches minerals from volcanic rock. Dry higher elevations promote faster evaporation of the brine pools. 

The primary cost of salt flat extraction is its water use, and obtaining exact numbers is difficult. However, estimates for water use range from 250 gallons per extracted pound up to 240,000 gallons.  The Chilean government has provided data suggesting that the water for brine production at the Atacama flats exceeds the aquifer’s ability to resupply by 30%, and its lithium mining uses about 65% of the region’s water. 

These mining operations are taking place in a high desert where the water supply is limited; indigenous communities are in a water crisis predicament, and local agriculture is being strained. Bolivian indigenous groups living near abandoned mines also have to deal with the materials left behind, disrupting local ecosystems. 

Many of these indigenous groups have been subjected to similar abuses by international mining firms in the past. The result is that the communities now are in staunch opposition to new mining projects or have claimed significant ownership of the projects. 

The Other Materials Used in Batteries

Batteries contain several other materials, such as cobalt, nickel, and graphite. Half of the world’s supply of cobalt is mined out of Congo. There has been heavy Chinese investment into the Congo, resulting in many industrial mining operations that feed Chinese battery production demands.

However, local workers are often excluded from such enterprises and relegated to digging unsafe artisanal mines with minimal, if any, recourse in the case of injuries. These locals end up selling their cobalt to the same traders who work with the industrial-scale mines, and it is eventually ferried to China.

Production of nickel is not as tenuous but is not without cost. Nickel is mined throughout the globe, and around 30% of the total supply comes from Indonesia. Most nickel is used in stainless steel, but 6% is used to make batteries.  

Are Electric Vehicles Good for the Environment?

When taken collectively, it may appear that there is a high cost to making electric vehicles a reality. When assessing the lifecycle impacts of electronic versus traditional fossil fuel burning vehicles, EVs are undoubtedly front-loaded with emissions due to the environmental cost of making batteries. Yet, the difference is made up over the vehicle’s lifetime. 

It’s estimated that in the US internal combustion engines produce between 60 to 68% more emissions than EVs. Considering the outsized role that fuel makes in this calculation, creating a grid using more clean energy is almost as important as putting more EVs on the road. In Europe, depending on how the EV is charged, average emissions savings range between 28% and 72%.  

Closing Thoughts

At the end of the day, a transition to electric vehicles is still necessary to make a real change to global emissions. Nonetheless, those living near mining operations still have a significant number of environmental, water, and health challenges to contend with, even before they are confronted with the challenges of climate change. 

Governments should be doing a better job holding the mining industry to higher standards of proper site management. We must also build out the electric infrastructure that includes multiple sources of green energy and its effective distribution. 

On the other end of the EV lifecycle, we need to make the recycling of lithium batteries easier and preferable to lead acid batteries. It is up to us to push democratic governments towards a greener future and hold them to account for the hazardous flaws in the current infrastructure. 

Disclaimer: The information provided in this article is solely the author’s opinion and not investment advice – it is provided for educational purposes only. By using this, you agree that the information does not constitute any investment or financial instructions. Do conduct your own research and reach out to financial advisors before making any investment decisions.

The author of this text, Jean Chalopin, is a global business leader with a background encompassing banking, biotech, and entertainment. Mr. Chalopin is Chairman of Deltec International Group, www.deltecbank.com.

The co-author of this text, Robin Trehan, has a bachelor’s degree in economics, a master’s in international business and finance, and an MBA in electronic business. Mr. Trehan is a Senior VP at Deltec International Group, www.deltecbank.com.

The views, thoughts, and opinions expressed in this text are solely the views of the authors, and do not necessarily reflect those of Deltec International Group, its subsidiaries, and/or its employees.

However, challenges have slowed the development of Li-S technology, most notably – stability. A recent breakthrough in understanding its cathode chemistry provided a model way of overcoming these obstacles to commercializing Li-S batteries. 

Engineers at Drexel University utilized a carbon nanofiber mesh confining sulfur and vapor dispositions so to prevent adverse chemical reactions. The result is crystallized sulfur unreactive to carbonate electrolytes, mitigating their harmful product – polysulfide. 

They demonstrated that the cathode in their prototype Li-S battery remained stable for 4,000 charge-discharge cycles, or 10 years of regular use. This Li-S battery also provided more than three times the capacity of its lithium-ion counterpart. 

Even though they are trying to fully understand the fine print behind their discovery of monoclinic sulfur at room temperature, this breakthrough helps pave the way to commercialized Li-S batteries for electric vehicles worldwide. 

Source: https://drexel.edu/news/archive/2022/february/lithium-sulfur-cathode-carbonate-electrolyte

Electric vehicles lead the market in being less expensive to maintain and in operating more efficiently than combustion-engine equivalents. Further, car-sharing produces a lower cost-per-mile-driven for both enterprises and end-users. When you combine this with the progressive automation of vehicles (and the resultant drop in accidents), you have a trifecta of economic drivers encouraging a mobility revolution.

According to Statista, revenues of the ride-hailing and taxi segments are expected to reach $314.2 billion in 2022. These segments succeed where car ownership fails through lower cost and greater ease. Younger generations seem unwilling to burden themselves with the costs of owning vehicles. Environmental factors also play a significant role. 

A study by Pew Research shows that the percentage of Americans using ride-sharing services went from 15% to 36% between 2015 and 2018. Despite a slump during the pandemic, continued growth is expected. 

Source: https://www.pewresearch.org/fact-tank/2019/01/04/more-americans-are-using-ride-hailing-apps/

Autonomous ridesharing is widely seen as the automotive industry’s next significant step. Large ride-hailing businesses such as Lyft, Uber, and Didi have made significant technological advances in the production of self-driving vehicles. Analysts generally forecast that the likes of Uber and Lyft shall pursue the autonomous market worldwide. 

The Cost of Autonomous Ride-Hailing

Analyst for the popular ETF “ARKQ” (Autonomous Technology & Robotics), Tasha Keeney, says that recent research estimates the total addressable opportunity for the ride-hail market to be $11-12 trillion by 2030. 

Much of this growth comes from autonomous vehicles over human-driven counterparts, and from lower labour and insurance costs. The current average price of an Uber is $2 per mile, and $0.50-0.70 for Didi. When at scale, platforms could profit from rides costing only $0.25 per mile.  

Regulations, technical maturity, business-case attractiveness, and consumer choice all play roles in the deployment of robo-taxis and robo-shuttles. 

The cost of an autonomous vehicle heavily influences the consumer’s preference. The high price tag comes from the relativeness newness of the underlying technology, the length of time it takes to develop it, and the operations behind it. This is not so dissimilar to the modern car before the arrival of Ford’s Model T. 

We naturally expect the cost of autonomous vehicle production to rapidly decline over this decade. In time, nonautonomous automobiles shall strongly compete against autonomous counterparts. 

Source: https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/the-road-to-affordable-autonomous-mobility

The Current State of Autonomous Ride-Hailing

The United Nations Economic Commission for Europe (UNECE) approved the deployment of automatic lanes for public highways in January 2021.

Drivers will be able to disengage from the task of driving given certain conditions, such as staying to a speed of less than 60kph (37mph), operating on pedestrian-free roads (i.e., highways), and having an automated 10-second warning (to impact) to re-engage.

Japan and Germany formally allowed “conditional eyes off” or “level 3” autonomous driving on public highways. Meanwhile, the United Kingdom and other European Union countries are anticipated to follow their lead in 2022. 

In March 2021, Japan’s Honda announced that the car model “Legend” would be the country’s first level 3 car on the road. 

Later in the same year, Germany authorized level 3 vehicles, with Mercedes claiming to be the first original equipment manufacturer to meet worldwide criteria for such cars. France indicated that revisions shall take place so their national legislation includes UNECE’s requirements. The UK stated that level 3 use will be permitted on the road by the end of 2021. 

Germany’s Federal Minister, Andreas Scheuer, introduced new rules in February 2021 intended to make it the first country in the world to regulate level 4 autonomous driving. Level 4 autonomy entails the capacity to manoeuvre, steer, accelerate, and brake without a driver’s assistance. USA’s Waymo, and China’s Baidu, already supply and test such mobility services. 

How Is the USA Doing? 

Tesla has been working on full self-driving (FSD) vehicles in the United States. The firm sent its FSD beta software to approximately a thousand drivers in San Francisco and has actively made various enhancements. 

Robo-taxis are the most in-demand self-driving cars, amassing test kilometres and drawing significant investments. Numerous fresh trials were conducted in the United States, China, Dubai, and Europe in the last twelve months. Particularly in China, there is an incredible amount of interest in robo-taxi companies.

Across all nations, private companies vie to hit the streets before others, understanding the potential market opportunity.  For example, Cruise, Zoox, and Waymo have concentrated their testing on San Francisco’s crowded streets. 

Mobileye plans to launch a driverless commercial on-demand service in Tel Aviv.

Source: https://www.theverge.com/2019/8/30/20840954/china-didi-chuxing-self-driving-car-robot-taxi-launch-experiment-shanghai

Then there’s China, which in November 2021 allowed the commercial use of the country’s first autonomous taxis, developed by Chinese tech giant Baidu and start-up Pony.ai. This brought hundreds of robo-taxis to the streets of Beijing. Also, firms like AutoX and Didi are boosting their testing around the country.

The Aptiv-Hyundai joint venture, Motional, launched a new robo-taxi service in Las Vegas in February 2022. The service provides free rides in autonomous vehicles to the public around downtown Las Vegas, with human safety operators behind the wheel. They want to accomplish two objectives: advertise the service and collect user feedback. 

Cruise and Waymo started with free services in San Francisco but were recently given the green light to start charging fees. 

The Future

Ride-hailing, autonomous vehicles and electrification continues to converge and offer city dwellers a better way to travel. Research from The Boston Consulting Group (BCG) estimates that by 2030, a quarter of all miles driven in the US will be in shared autonomous vehicles. 

Adoption could be even faster and more widespread if technological advances and pricing strategies decrease consumer prices further. Radically different vehicle designs (such as autonomous pods), new customized services (such as pooled ride-sharing), and new income streams (in-vehicle advertising) are all possible innovations waiting to happen. 

For many people, their next car purchase seems their last, as the automotive industry transforms. Vehicle manufacturers need to completely redesign their business models and develop new methods of earning revenue. 

Level 5 autonomous cars pilot themselves in any environment without human input nor oversight. We are still some ways off in necessary technology and overall consumer trust, but a lot of ground has been covered in the last few years. 

While 100% autonomous self-driving is a long-term goal, semi-autonomous vehicles represent a feasible, short-term milestone that provides many of the same advantages. This will effectively slingshot long-term reform and adoption. 

Companies owning the autonomous technology stack stand ready to dominate enterprise values within the future automotive ecosystem. So, most of today’s companies may not survive the transformation. 

Disclaimer: The author of this text, Jean Chalopin, is a global business leader with a background encompassing banking, biotech, and entertainment. Mr. Chalopin is Chairman of Deltec International Group, www.deltecbank.com.

The co-author of this text, Robin Trehan, has a bachelor’s degree in economics, a master’s in international business and finance, and an MBA in electronic business. Mr. Trehan is a Senior VP at Deltec International Group, www.deltecbank.com

The views, thoughts, and opinions expressed in this text are solely the views of the authors, and do not necessarily reflect those of Deltec International Group, its subsidiaries, and/or its employees.