Expert Talk: How sustainable is the Battery Value Chain? Looking into challenges and future trends

Material supply and demand for lithium-ion batteries

The International Energy Agency (IEA) has modelled different scenarios for the global energy transition. Two key pathways shape the future of EV battery demand:

• The Net-Zero Emission (NZE) scenario assumes an efficient and fast implementation of clean energy technologies to limit global warming to 1.5°C by 2050. In this scenario, EV adoption grows quickly, with more than 250 million electric light-duty vehicles (LDVs) expected by 2030.
• The Stated Policies (STEPS) scenario is a more conservative alternative. It considers existing policies, infrastructure, and financial constraints of countries in the full realization of their commitments. Under this approach, the number of EVs is expected to reach just 125 million by 2030.

At the end of 2023 there were 40 million EVs in the world (Tracking global data on electric vehicles – Our World in Data) and about 17 million EVs were added in 2024 (Over 17 million EVs sold in 2024 – Record Year  – Rho Motion).

Regardless of the scenario, the demand for lithium-ion batteries (LIBs) will rise sharply.

Critical materials in lithium-ion battery production - why are some battery materials more problematic?

Lithium-ion batteries rely on cathode active materials (AMs), which contain lithium (Li) and often scarce elements like cobalt (Co) and nickel (Ni). Particularly the LiNi_xMn_yCo_1-x-yO₂ (NMC) family is one of the most widely used cathode types in EVs. In 2022, NMC622 was the most common cathode material, accounting for 66% of the market. An alternative chemistry, LiFePO₄ (LFP), which contains no critical metals, represented 27% of the EV battery market.

Picture 1 – Market share for the manufacturing of the major cathode materials in lithium-ion batteries in 2022

The use of non-abundant elements like cobalt, nickel, and lithium presents two main challenges:

1. These elements occur in low concentrations in natural minerals, making mining and processing highly energy intensive. This not only raises production costs but also increases the emission footprint of the cathode AMs, as mining and chemical industries still heavily rely on fossil fuels.
2. Rising demand for these materials could destabilize supply chains. In 2022 alone, EV production accounted for 60% of lithium demand, 30% of cobalt demand, and 10% of nickel demand. Although supply and demand have remained balanced over the past decade, rapid growth could challenge global reserves.

Picture 1 Historical data for the demand and supply of Li, Co, and Ni.

Are battery materials running out?

One of the key concerns in battery sustainability is whether we have enough resources to meet future demand. To assess this, it is important to distinguish between reserves and resources. Reserves refer to the fraction of known resources that can be extracted under current economic conditions. Resources, on the other hand, include all estimated deposits—whether currently accessible or not.

As of 2022, global reserves stood at 22 million tons for lithium, 8.3 million tons for cobalt, and 95 million tons for nickel. In contrast, total global resources are estimated at 89 million tons for lithium, 25 million tons for cobalt, and 300 million tons for nickel.

While lithium and nickel reserves appear sufficient, cobalt depletion presents a greater risk. For the LDV market under the NZE scenario, cobalt reserves would shrink by 55% by 2030, compared to 12% for lithium and 14% for nickel —assuming the use of NMC622 LIB chemistry and no expansion in global reserves.

The progress in battery technology and a more responsible consumption could ease this pressure.

• Moving from NMC622, where nickel-to-cobalt is 3:1, to NMC811, where the ratio increases to 8:1, would significantly reduce the relative amount of cobalt used, lowering cobalt depletion by 26%.
• Shifting to smaller battery packs—for example, 50 kWh instead of 75 kWh—could cut cobalt demand by one-third.

Picture 2 – Potential depletion of the Li, Co, and Ni reserves driven by the demand rise in the electric vehicle market evaluated for NZE and Stated Policy scenarios and different cathode chemistries in lithium-ion batteries.

Supply chain of lithium-ion batteries: can it keep up?

By 2030, demand for lithium, cobalt, and nickel in the EV sector will be seven to eleven times higher than in 2022. While reserve exhaustion is unlikely, the need for a rapid expansion in mining and refining is inevitable.

Between 2016 and 2022, lithium production increased by 220%, cobalt by 90%, and nickel by 70%. However, these growth rates fall short of what is needed. According to S&P Global, developing a new lithium mining project takes up to seven years, making it challenging to scale up quickly enough to meet demand.

Geographical imbalances in the supply chain

The battery supply chain is highly concentrated, which could hinder sustainability. For example, Europe accounted for 21% of global passenger car sales in 2022, yet it only represents 7% of the world’s Li-ion cell production capacity. In contrast, China dominates battery production, accounting for 76% of global gigafactory capacity.

Material extraction and refining are also highly centralized:

• Cobalt: The Democratic Republic of Congo supplies 74% of the world’s cobalt, and China processes 74%.
• Lithium: Australia dominates mining (47%), while China refines 65% of global lithium.
• Nickel: Indonesia leads both production (49%) and refining (43%).
• Cathode material powder synthesis: China holds 70% of global production, followed by South Korea (15%) and Japan (14%).

This geographical imbalance creates supply risks, making it essential to develop regional battery production hubs and alternative material sources.

Much to gain in better recycling

Recycling is one of the most underdeveloped parts of the battery value chain, yet it presents a crucial opportunity to enhance sustainability. Beyond recovering valuable materials, end-of-life management plays a vital role in battery sustainability. It is not just about reclaiming precious elements from retired batteries but also about reducing the emissions linked to their production phase. Recycling can help mitigate geographical imbalances in the supply chain while also significantly lowering emissions.

The challenge is scale. Right now, recyclers mostly process production scraps from gigafactories. However, this will change soon. By 2030, more than 1,500 kilotons of EV batteries will retire, rising to 20,000 kilotons by 2040. With an assumed 95% recovery rate, battery recycling could contribute significantly to the production of new LIBs. Under the NZE and STEPS scenarios, recycling could supply 4–12% of lithium demand and 7–19% of cobalt demand for EV batteries by 2030.

Before reaching the material recycling stage, many EV batteries can be repurposed or refurbished, reducing waste and maximizing their value.

• One approach is electrode restoration, where the electrodes from retired batteries are directly reintegrated into new cells with minimal processing. This method saves both cost and energy, avoiding the need for conventional material recovery, which typically involves a series of mechanical and thermal treatments. The traditional process converts batteries into ‘black mass’, which is then refined into its constituent metals through pyrometallurgical and hydrometallurgical techniques.
• Another strategy is battery reuse or repurposing, where retired batteries are refurbished without being opened for second-life applications. These repurposed batteries provide affordable energy storage solutions for applications such as renewable energy integration, microgrids, EV charging infrastructure, and grid stabilization.

The potential is significant. By 2030, global demand for utility-scale energy storage is projected to reach ~200 GWh per year. Retired EV batteries could supply between 100 and 200 GWh, making second-life solutions a key driver of battery sustainability.

Conclusion: the urgent need for scaling-up

The EnergyVille research shows that the biggest challenge for battery sustainability is not resource depletion but the need for a well-timed scale-up in production.

Momo Safari emphasises: “A well-timed scale-up of production across the entire battery value chain will be the biggest challenge for any battery technology in meeting net-zero-emission mobility targets. Achieving a more evenly distributed and resilient battery supply chain will require stronger governmental support and policy commitment. The transition to sustainable energy storage cannot be driven by industry alone—it demands coordinated action from policymakers, investors, and stakeholders.”

Ensuring a sustainable battery future requires:

• faster expansion of mining and refining capacity
• more geographically balanced supply chain
• stronger governmental and policy support

With coordinated action, the industry can meet net-zero mobility targets while ensuring long-term battery sustainability.

Want more information after reading this expert talk?

Read the expert paper ‘A Perspective on the Battery Value Chain and the Future of Battery Electric Vehicles’ by Momo Safari at ‘Battery Energy’ journal

The EnergyVille battery research

The EnergyVille battery research covers the whole value chain from basic material research, over cell architectures and new battery concepts to battery management and system integration.

References

M. Safari, Battery Energy, 2024, 4(1): 20240016.