How Does the Electric Car Industry Respond to a Lithium Shortage?

Person holding a lithium button battery

The global electric car industry has begun to find alternative solutions for the contracting supply of lithium, such as Tesla’s plan to reduce its reliance on cobalt for electric car batteries.

Lithium-ion batteries comprise a mix of minerals for production, and these include cobalt and graphite. If you’ve been keeping track of market trends for spodumene gemstone, the price movement for this mineral has likely increased as global supplies fail to keep up with the current level of demand.

More Electric Vehicles

According to the International Energy Agency (IEA), there would 13 million electric cars used all over the world by the end of 2020. This figure could easily reach up to 125 million by 2030, which causes concerns on forecast prices for battery metal potentially crashing due to the current upswing in values.

For instance, the price of lithium has increased by more than two-fold between 2016 and 2018. On the other hand, cobalt prices have risen by more than three-fold since January 2016. If the current growth continues, prices could reach their limit even before the IEA’s forecast become true.

Price Correction

Tesla wants to increase its use of nickel for its electric cars with eventually little to no dependence on cobalt. Industry data showed that the company’s electric batteries comprise 85% nickel and 10% cobalt, while aluminum consists of the remainder.

Many battery producers and car manufacturers have tried to avoid using less cobalt due to the inherently high costs. The caveat, though, involves safety. Nickel supplies may be cheaper and more available, yet it has a higher risk for combustion.


While electric cars have become popular, it’s unlikely that they would completely take over roads and highways in the future. However, there is a need to keep a close watch on prices of battery metals, due to their volatility caused by varying trends in the automotive market.