08 March 2024 | Anthony L. Cheng, Erica R. H. Fuchs, Valerie J. Karplus & Jeremy J. Michalek
Electric vehicle (EV) battery chemistry significantly affects supply chain vulnerability for critical minerals like lithium, cobalt, nickel, and manganese. This study compares two cathode chemistries—nickel manganese cobalt (NMC) and lithium iron phosphate (LFP)—by mapping their supply chains, calculating vulnerability indices, and using network flow optimization to assess uncertainties. Both chemistries are highly vulnerable to disruptions in China, with 80% of NMC and 92% of LFP cathodes relying on Chinese minerals. NMC has additional risks due to high concentrations of nickel, cobalt, and manganese in other countries. The combined vulnerability of multiple supply chain stages is greater than individual steps. Reducing risk requires addressing vulnerabilities across the entire battery supply chain.
EV electrification is crucial for reducing transportation emissions. Automakers' battery design choices influence reliance on critical materials. The rapid growth of EV production will increase demand for these minerals, with projections of 5–40 times 2020 demand by 2040. Governments are concerned about supply chain vulnerabilities and have enacted policies to promote domestic production. Policymakers need measurements of supply chain vulnerabilities to assess risks and implement regulations.
Currently, EV batteries mainly use lithium-ion chemistries. The primary cathode chemistries are NCA, NMC, and LFP, which depend on lithium, nickel, cobalt, and manganese. The battery supply chain includes upstream (mining), midstream (processing), and downstream (manufacturing and recycling). China dominates midstream and downstream supply chains for all materials. However, the extent of vulnerability to specific countries is unclear.
This study uses material flow analysis and optimization to assess vulnerability indices for LFP and NMC. For LFP, 92% of cathode production involves China, while for NMC, 80% involves China. These indices account for uncertainties in trade and production data. The results show that LFP and NMC supply chains are highly vulnerable to disruptions in China. Even in the most optimistic case, LFP vulnerability is over 90%. For NMC, vulnerability ranges from 57% to 100%. The study highlights the need for a comprehensive approach to reduce supply chain risks, including diversifying production and refining away from China. The methodology can be applied to other global supply chains to assess vulnerabilities and inform policy decisions.Electric vehicle (EV) battery chemistry significantly affects supply chain vulnerability for critical minerals like lithium, cobalt, nickel, and manganese. This study compares two cathode chemistries—nickel manganese cobalt (NMC) and lithium iron phosphate (LFP)—by mapping their supply chains, calculating vulnerability indices, and using network flow optimization to assess uncertainties. Both chemistries are highly vulnerable to disruptions in China, with 80% of NMC and 92% of LFP cathodes relying on Chinese minerals. NMC has additional risks due to high concentrations of nickel, cobalt, and manganese in other countries. The combined vulnerability of multiple supply chain stages is greater than individual steps. Reducing risk requires addressing vulnerabilities across the entire battery supply chain.
EV electrification is crucial for reducing transportation emissions. Automakers' battery design choices influence reliance on critical materials. The rapid growth of EV production will increase demand for these minerals, with projections of 5–40 times 2020 demand by 2040. Governments are concerned about supply chain vulnerabilities and have enacted policies to promote domestic production. Policymakers need measurements of supply chain vulnerabilities to assess risks and implement regulations.
Currently, EV batteries mainly use lithium-ion chemistries. The primary cathode chemistries are NCA, NMC, and LFP, which depend on lithium, nickel, cobalt, and manganese. The battery supply chain includes upstream (mining), midstream (processing), and downstream (manufacturing and recycling). China dominates midstream and downstream supply chains for all materials. However, the extent of vulnerability to specific countries is unclear.
This study uses material flow analysis and optimization to assess vulnerability indices for LFP and NMC. For LFP, 92% of cathode production involves China, while for NMC, 80% involves China. These indices account for uncertainties in trade and production data. The results show that LFP and NMC supply chains are highly vulnerable to disruptions in China. Even in the most optimistic case, LFP vulnerability is over 90%. For NMC, vulnerability ranges from 57% to 100%. The study highlights the need for a comprehensive approach to reduce supply chain risks, including diversifying production and refining away from China. The methodology can be applied to other global supply chains to assess vulnerabilities and inform policy decisions.