Automakers have ambitious plans to fill their lineups with electric cars and hybrids, but they could face a major roadblock, according to Bloomberg. Because while the number of battery-powered cars automakers want to build appears to be limitless, the amount of metals that go into the batteries is finite.
When BMW announced electrification plans that included an all-electric X3 and Mini model last September, the going rate for 21 kilograms (46 pounds) of cobalt, which is the amount needed for the average electric-car battery pack, was under $600. It's now approaching $1,700, according to Bloomberg.
The need for cobalt, which is typically combined with nickel and manganese in electric-car batteries, puts automakers in an uncomfortable position. Cobalt is relatively scarce; current reserves may not even be adequate to meet anticipated demand for electric cars. Replacing every car on the road with a Tesla Model X would require twice the current global reserves of cobalt, according to a study commissioned by mining company Glencore Plc. But automakers feel pressured to build more cars with batteries in order to meet stricter emissions standards, giving the suppliers a lot of power.
There are ethical issues as well. Most of the world's cobalt comes from the Democratic Republic of the Congo, where corruption is rampant and so-called "artisan miners" mine cobalt by hand. Many of those miners are children. Automakers have made efforts to ethically source materials for electric cars, but given that the Congo accounts for 60 percent of world cobalt production, that might be tough.
Many of the mining companies working in the Congo are Chinese, as are most of the refineries that process it. The Chinese State Reserve Bureau reportedly stockpiles the metal. That could be a boon to China's domestic auto industry, but could also make it more difficult for foreign companies to access the supply.
The news isn't all bad, though. Bloomberg noted that a similar spike in demand for palladium occurred in the early 2000s but eventually died down. Palladium is used in catalytic converters, but automakers were able to find ways of reducing the amount needed. Changes to battery chemistry, such as increasing the amount of nickel, could reduce the need for cobalt. For now, though, automakers will likely be at the mercy of the cobalt suppliers.