Supply Shortage Could Derail Electric Vehicle Boom

Fears of massive supply-chain disruption and consequences from Russia's invasion of Ukraine, which has thrown markets into a spiral, have accelerated an already ferocious commodity supercycle.

Since the second half of last year, critical battery elements such as lithium and cobalt, as well as nickel and graphite, have been in short supply. Those anxieties have now been amplified. With electric vehicle sales likely to treble this year, automakers are scrambling to prevent battery supply chain disruptions and rising raw material costs. While lithium has gotten the most attention in the media, another important battery element, graphite, might be jeopardized by a worsening scarcity.

Rising electric vehicle demand is boosting battery demand, with S&P Global Platts Analytics forecasting global light-duty EV sales to reach roughly 26.8 million by 2030, up from 6.29 million in 2021.

Speaking to S&P Global Platts, Tirupati CEO Shishir Poddar said that Graphite consumption is predicted to triple by 2030, outstripping our worldwide production capacity. According to Poddar, we'll require an additional 4 to 5 million tonnes of graphite every year.

Graphite miners are now in a position to take advantage of what might be a significant opportunity. The fact that after the graphite is out of the ground, the specialized talent and value addition comes into play just adds to the complexity. The production of battery-grade graphite anode material is difficult, especially at scale, and there are major obstacles to entry.

By the end of this decade, the global graphite market is expected to be worth $50 billion.

Graphite makes up 20 percent to 30 percent of the fabric of an electric vehicle or power storage battery, acting as the negative finish, or "anode," without which there would be no lithium-ion battery at all. With international EV sales expected to treble this year alone in a $3-trillion market for electric vehicles, the future seems bright.