It is foreseeable that in the coming year, as we increasingly tame the Coronavirus, the issue of sustainability will once again become more explosive. This also applies to electric cars, of course. It is obvious that these should charge with green energy. An electric car powered by coal makes little sense. When it comes to production, however, the issue is much more complex.
On the one hand, the raw materials used are crucial. On the other hand, the supply chains also play a significant role. It is well known that cobalt is extremely controversial. This is because large quantities come from the Congo, where the ferromagnetic transition metal is mined under extreme environmental conditions and sometimes by children. Against this background, Tesla has been trying for years to reduce the proportion of cobalt in its batteries.
There is a similar problem with lithium. Here, too, there can be severe environmental damage if the raw material is extracted from brine lakes containing lithium. This is a challenge in Chile's Salar de Atacama, for example, where Albemarle and SQM, the world's two largest lithium producers, are mining. Much more environmentally friendly is extraction from hard rock deposits, which Rock Tech Lithium, for example, has.
Production on site if possible
The supply chains have a similarly serious impact on sustainability as the raw materials. It is not really acceptable to transport tons of battery cells from China and South Korea to Europe in order to build battery blocks from them here. Batteries, or rather the corresponding cells, have a high weight, which causes high energy consumption during transport.
This is a major reason why battery cell factories are currently being built extensively in Europe. BMW, for example, has announced its intention to purchase its battery cells locally in the future. So far, the Germans have imported their cells from CATL in China and from Samsung in South Korea. In the future, they will come from Hungary, Germany and Sweden. BMW also wants them to be produced exclusively with green electricity.
Tesla is probably the most advanced company in this area. The Americans publish a sustainability report. The company also requires its suppliers to ensure that the products they supply are sustainably sourced and manufactured. The car companies really have no other choice. The younger their customers become, the more sustainability plays a decisive role in purchasing decisions.
Investors apply pressure
At the same time, large institutional investors in particular, such as insurance companies and investment funds, are increasingly demanding that car companies produce their cars as sustainably as possible, i.e. in an environmentally friendly manner. The VW plant in Zwickau, where the ID.3 electric car rolls off the production line, produces completely CO2-free on balance. Another example is SVolt. It is a unique selling point of the Chinese company that it produces its battery cells without cobalt. SVolt now wants to set up a large production facility in the state of Saarland in Germany.
However, it is important to think about the supply chains from the very beginning. After all, these don't start with the battery cells, but with the raw materials needed for them. This is precisely why Rock Tech Lithium is planning, as a first step, to concentrate its lithium-bearing ore extracted in Canada on-site. This concentrate will then be processed into lithium hydroxide in a converter in Europe. By doing so, the company will be able to minimize transportation costs and environmental impact. That in turn might also play a substantial role with stock investors.
I wish you all a happy and healthy new year 2021!