Why are electric vehicle prices falling?

As the prices of major commodities fall, the EV revolution looks set to gather speed. With cheaper electricity and materials, manufacturers are increasingly focusing on electric vehicles rather than traditional combustion engine vehicles.

This is causing a rapid increase in the number of electric vehicle models available on the market and, consequently, an increase in the number of sales. As more people switch to electric vehicles, the demand for electric charging infrastructure will also increase, further driving the shift.

With the high prices of EVs historically being one of the main barriers to their widespread adoption, a sharp, if only temporary, drop in the price of the raw materials needed to manufacture batteries is likely to precipitate the global shift towards EVs. while automakers slash prices to appeal to consumers who refuse to buy an expensive vehicle, particularly during a cost-of-living crisis.

In recent months, the cost of lithium and cobalt, two essential components of electric vehicle batteries, have been significantly reduced; lithium is down nearly 20%, while cobalt is down more than 50%. Copper prices also fell by around 20%. As expected, sales increased considerably.

Due to significant price drops, automakers are now able to reduce the cost of electric vehicles. Tesla recently slashed prices heavily on its Model S sedan and Model X SUV and expects to see more cuts soon. The cost of an electric car in the US has dropped by about $1,000 from January to February and could be equivalent to gasoline car prices by the end of 2021.

Electric vehicles with cleaner technology

Reducing the cost of electric vehicles is a big step in the fight against climate change. Studies have shown that electric vehicles can significantly reduce carbon emissions, making this development highly beneficial. While electric vehicle emissions differ by model, overall, these cars can produce up to 83% less carbon dioxide than gasoline-powered cars when the entire production process is taken into account. This includes the electricity used to build these vehicles.

Despite being considered more environmentally friendly than gasoline or diesel cars, plug-in vehicles can still harm the environment if not charged and manufactured properly. Environmental experts generally agree with this. Electric vehicles appear to be a cleaner alternative to traditional means of transport, but their production still requires the burning of fossil fuels in some areas. Furthermore, producing the vehicle itself consumes a significant amount of energy.

Therefore, to maximize the positive environmental impact of electric vehicles, we need to focus more on improving the sustainability of the extractive operations that supply raw materials such as lithium and cobalt for the production of electric vehicles. This is essential to ensure an environmentally friendly supply.

If the US switched to electric vehicles only, it could require three times the current amount of lithium produced for the global market. This would lead to diminished water supply and further environmental damage.

With the growing demand for electric vehicles and batteries, mining activities are likely to increase dramatically. Unfortunately, this comes at a high environmental cost due to the energy-intensive manufacturing process of electric vehicles compared to regular gasoline or diesel vehicles.

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Environmental damage caused by the extraction process includes the release of harmful gases, high demand for water, and disregard of hazardous waste. Over the next 30 years, mineral extraction will produce about a trillion metric tons of waste, including copper, nickel, manganese and lithium.

industry reform

Fortunately, diligent efforts have been made to make the mining process more ethical and bearable. The Fair Cobalt Alliance is one such effort launched in 2020 by smartphone maker Fairphone to “strengthen and professionalize the artisanal cobalt mining sector” in the Democratic Republic of Congo, the world’s largest exporter of cobalt.

Notable players such as Tesla, Glencore and CMOC Group Limited (CMOC) participated in the initiative. In particular, CMOC has made great strides in promoting sustainability in the DRC with its copper and cobalt mining operations. This company is considered the second largest producer of cobalt in the world and is looking for other more sustainable energy sources, such as hydroelectricity and solar energy, to exploit its mines, given the enormous potential of the Democratic Republic of Congo in both energy sources. green energy.

TFM, a CMOC-owned mining company located in the Democratic Republic of Congo, has spent approximately US$256 million since 2007 rehabilitating the Nseke Hydroelectric Power Plant, an operating hydroelectric plant with an installed capacity of 260 megawatts located on the Lualaba River.

Other companies around the world are also innovating to try to reduce their carbon footprint. Savannah Resources, for example, announced its decision to employ battery-electric mining technology to make its next project, Western Europe’s largest lithium mine in Portugal, carbon-free. This would reduce your project’s direct carbon emissions to zero. They are also determined to reduce the plant’s indirect emissions, such as electricity, by 54%, with a potential reduction in the plant’s energy demand.

Certain companies are trying to revolutionize the mining industry. Geothermal power plants harness the Earth’s heat to generate a constant flow of steam, which is then used to generate electricity. Geothermal energy sources require extracting salt-infused water from underground. This water is highly enriched with minerals like lithium, manganese and zinc.

Some initiatives have been initiated to assess the feasibility and sustainability of battery-level lithium extraction from existing geothermal plants; Vulcan Energy Resources is conducting a trial in the Upper Rhine Valley in Germany with the aim of being the world’s first producer of carbon-free lithium. The European Geothermal Energy Council has argued that a single geothermal plant can produce electricity, heating, cooling and large amounts of lithium in a carbon-neutral process.

The recent reduction in lithium prices and other key commodities is likely to be temporary. However, advances in geothermal mineral extraction could cause a permanent drop in EV component prices. The transition to electric vehicles forces us to analyze the technologies used for their production and ensure sustainability throughout the value chain, from the extraction of raw materials to the manufacture of batteries.

For Times of Sustainability. Article in English

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