The average electric car battery requires eight to 10 kilograms of lithium, thus having enough of the metal is essential for the transition to emission-free vehicles. And having enough of it – on time – is essential for meeting the goals set out in the Inflation Reduction Act signed into law in August.
The climate provisions in the act put the country on a path toward reducing greenhouse gas output by 40% of 2005 levels. Part of this plan relies on cutting the sale of gas-powered vehicles to 50% of all new purchases by 2030. To do this, carmakers need lithium, and some are concerned that domestic production may not meet the demand.
“Yes, we’ll [eventually] have enough, but not by that time,” Keith Phillips, Chief Executive Officer of Piedmont Lithium, told Yahoo Finance Live. “There’s going to be a real crunch to get the material. We don’t have enough in the world to turn that much production in the world by 2035.”
The price of lithium carbonate has already doubled in 2022 and will multiply 40 times, according to the International Energy Agency (IEA), a 48-year-old organization that provides data, analysis, and policy recommendations for the energy sector, with special emphasis on meeting climate goals. Most of the future supply will come from outside the U.S., the IEA said.
The Inflation Reduction Act gives tax credits to companies as incentives for reducing emissions, with a requirement that 50% of parts and components be sourced in the U.S.
Piedmont Lithium, one of just a few U.S.-based miners of the metal, announced plans in August to begin construction on two new plants. One in Tennessee will be capable of processing 30,000 metric tons of lithium per year and another, in North Carolina, will supply lithium for one million electric vehicles per year, Phillips said.
In the meantime, carmakers including General Motors have secured partnerships with domestic mining operations ahead of the increased demand. China still dominates the industry, refining more than half of the global lithium supply, while Australia and Chile are the world’s largest producers. In the U.S., the Albemarle Silver Peak mine in Nevada remains the only operational lithium mine with meaningful output.