It’s been modeled and estimated that the electric vehicle push that various nations and spheres of influence are mandating could lead to some rather insurmountable choke points in the supply chain. And these issues will likely surface even faster than people think. Within the coming years, we could be facing geopolitical risks, according to Stellantis CEO Carlos Tavares.
Carlos Tavares Issues Warning For Politicians, Auto Industry
Tavares recently spoke at the Financial Times Future of the Car 2022 conference. According to Automotive News, he stated that he could anticipate the industry suffering supply problems with batteries around 2025 or 2026. However, if a supply shortage for batteries doesn’t occur, then we can undoubtedly expect “a significant dependence of the Western world vis-à-vis Asia.”
In regards to that, China dominates the supply chain needed to extract, refine, and distribute rare earth metals needed for battery production that eventually make their way in electric vehicles. And while headway has been made by the United States to reduce that level of dependency, it’s unclear if it’s enough to meet demand. Moreover, the skyrocketing prices of lithium and other commodities have so far put the hope of electric vehicles achieving a price parity with their gasoline counterparts firmly in the “wishful thinking” category.
Car manufacturers are building manufacturing capacity for batteries and for battery electric vehicles at an incredible rate, which could support the rapid changes in the market that policy makers are creating. However, Tavares has stated that raw material supply could create structural challenges in the coming years as EVs weigh an average of 500 kilos (1,102 pounds) more than traditional combustion-engine equivalents. That means that “a lot of raw material extraction” will take place and would eventually bring about a scarcity of materials and cause “geopolitical risks.” Additionally, the way the raw materials may be sourced in a few years might not be ideal.
Tavares has stated that automakers have been so focused on making the technology and working to bring a wave of battery electric vehicles to the market that they, along with regulators, haven’t thought about the long-term implications of the mobility transition. It seems that people aren’t looking further down the line at the risks of sourcing the raw materials needed for the change.
In short: brace yourselves for more financial pain.