Carlos Tavares, the CEO of Stellantis
The Great Lithium Challenge: The Uphill Battle for the Heart of Electric Vehicles
By Alex Langton and Elric Langton | 12 Oct 2023
You have probably noticed we live in an era where the electrification of transportation appears to be the panacea to environmental concerns; there lies a daunting challenge at its core: the raw materials required to power this dream. Carlos Tavares, the CEO of Stellantis, one of the world's automotive powerhouses, highlighted the crux of this issue when he said, "We know that we need lithium, and we are not producing as much as we need."
Of course, all right-thinking people want clean air and a clean environment. Still, a war on CO2 has not been thoroughly thought through.
You probably do not realise this is due to the fact that CO2 makes up only about 0.04% of the atmosphere, and water vapour can vary from 0 to 4%. But water vapour is the dominant greenhouse gas in our atmosphere. You probably do not know that plant life dies if CO2 falls below 0.03%-what's the phaseโฆTurkeyโs voting for Christmas!
The narrative of green energy is reshaping economies, industries, and, by extension, investment portfolios. Lithium is at the heart of this transformation, a pivotal component powering the shift to electrification. For investors seeking to capitalise on this seemingly seismic change, Carlos Tavares, CEO of automotive titan Stellantis, offers both a cautionary tale and a roadmap.
While paved with good intentions, the road to electrification is challenging. As governments and corporations champion the EV cause, they must simultaneously grapple with the intricate balance of supply, demand, geopolitics, and ethics that underpins the green revolution. We seek to unravel some of these complex issues in this article.
The race towards achieving "clean mobility" is juxtaposed with a critical supply and demand issue. With an estimated 1.3 billion internal combustion engine-powered cars on our roads, a shift to electric vehicles (EVs) would require an immense volume of lithium, hence the scramble around the world to bring lithium mines online. This isn't merely an issue of quantity but also of geopolitics. The concentration of lithium mining could usher in a new age of geopolitical tensions reminiscent of the oil conflicts of yesteryears.
Historically, Tavares has remained sceptical about the feasibility of a worldwide transition to EVs, pointing to a looming shortage of essential raw materials. For companies like Stellantis, the current market dynamics sometimes conflict with the ambition of electric expansion, especially when affordability and infrastructural gaps arise. Tavares warns that the scarcity and volatility of these crucial raw materials significantly strain EVs' affordability.
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