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The Road to Autonomy - Episode 108 | Electric Vehicles, Raw Materials and Supply Chains

Episode 108 | Electric Vehicles, Raw Materials and Supply Chains

The Road to Autonomy
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Alan Ohnsman, Senior Editor, Forbes joined Grayson Brulte on The Road to Autonomy Podcast to discuss the complex supply chains for electric vehicles and the growing shortage of raw materials and refining capacity for those materials.

The conversation begins with Alan discussing the shortage of raw materials and the lack of refining capacity to enable an all-electric future.

The push to shift to EVs happened faster than any of the major OEMs anticipated. – Alan Ohnsman

The major car manufacturers with the exception of Tesla and Chinese OEMs were caught flat footed with the pace of transition from internal combustion engines to electric vehicles. Over the past year, the price of lithium has increased 122% YTD, forcing EV manufacturers to increase the price of EVs by an average of 54.3% due to the increasing costs of raw materials. How did this happen? The major car manufacturers were simply just not prepared for the consumer demand for EVs.

What you are seeing with the run-up in prices especially for lithium would be exactly that. There was not a lot of advanced planning and now suddenly whether it’s General Motors or Ford, or VW and everyone else saying we need lots of this stuff, we need it now. Well it’s supply and demand. The price is going to react to that when demand suddenly spikes. – Alan Ohnsman

With the average price of a new electric vehicle in the United States being $66k, does this create an opportunity for the used hybrid market to grow? Could this create an opportunity for Toyota to sell new hybrid models as well? Possibly. Alan breaks down what he calls the Tesla Effect and its effect on the market.

While Tesla is having an effect on the market and driving the average price of a new EV higher, there is also the supply chain issue that is causing elevated prices. Furthermore there is a reported shortage of over 384 graphite, lithium, nickel and cobalt mines and an undisclosed shortage of refining capacity for raw materials globally according to Benchmark Minerals.

If you look at the scale of demand and where it’s going to be throughout the 2020’s and into the 2030’s, we are not ready. We need far more sources of supply. – Alan Ohnsman

One new potential source of supply that could be coming online in the near feature is The Salton Sea lithium deposit in California. For an article that Alan authored for Forbes, titled; California’s Lithium Rush For EV Batteries Hinges On Taming Toxic, Volcanic Brine he visited The Salton Sea to learn about the opportunity first-hand. Governor Newson has called The Salton Sea the “Saudi Arabia of Lithium”. Could this indeed be true? Alan shares his first-hand account of what he learned from visiting the region and meeting the lithium producers.

This has never really been done before. Getting Lithium from brine is not a new thing. Getting lithium from this particular type of brine is completely new. It has a lot of challenges. It’s going to be fascinating to see. If it works, it’s so beneficial for everyone, because it would be a more environmentally friendly sustainable way to do this since you are just tapping into a stream that already exists. – Alan Ohnsman

While this method is still unproven, the State of California has moved forward and proposed a flat-rate lithium tax which would impose a tax of $400 per tonne for the first 20,000 tonnes of lithium produced annually, $600 per tonne for the next 10,000 tonnes, and $800 per tonne with output of 30,000 tonnes or more. Is this a classic case of putting the cart before the horse? Could this create an opportunity for Nevada to step in and offer economic incentive packages for mining companies to relocate to Nevada and explore their lithium deposits? The market will be defined by economics and business viability. Grayson and Alan discuss what the economic impact of the proposed tax will have on the Salton Sea region.

If they perfect the technology, the tax is probably not that big of a deal as time goes on. But in those critical early years, it is a problem and it will add to the expense of what is already a fairly complicated thing. – Alan Ohnsman

Prior to becoming a destination for lithium extraction, The Salton Sea was the Speedboat Capital of the World in the 1...

10/11/22 • 49 min

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