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In an interview, Elon Musk, the CEO of Tesla, made a statement that has sparked a lot of interest in the world of electric vehicles (EVs) and battery technology. He said, "Our cells should be called Nickel-Graphite, because primarily the cathode is nickel and the anode side is graphite… [there’s] a little bit of lithium in there, but it’s like the salt on the salad….. the amount of lithium in a lithium ion battery is about 2% of its total volume and that “lithium in a salt form is virtually everywhere… there is definitely no supply issues with lithium.”
This comment has shone a light on the importance of graphite in the production of EV batteries.
Graphite is a critical component of lithium-ion batteries, which power electric vehicles. The anode of these batteries, which is the part that stores the lithium ions, is made up of almost 98% graphite. This means that graphite makes up about 50% of the total battery. Unlike other materials, there is no existing replacement for graphite in anodes. This makes graphite an essential material in the EV industry.
Both natural and synthetic graphite are used to make up an anode. The blend of these two types of graphite is crucial in achieving the desired performance of the battery.
As of 2022, nearly 100% of natural graphite processing was completed in China. This highlights the importance of controlling graphite mining and midstream processing for any supply chain, especially with full control in China now.
According to Benchmark Mineral Intelligence, the supply of natural graphite is expected to rise from 1.5 million tonnes in 2022 to 4 million tonnes in 2032. However, the demand for graphite is also expected to increase significantly, with a 415% growth in demand for natural anode material predicted between 2022 and 2030.
Major auto manufacturers like Volkswagen, Mercedes Benz, BMW, and large American Auto manufacturers have all pledged to transition towards replacing traditional fossil fuel burning cars with clean energy, with electric vehicles leading the way. Many governments have also mandated that all new cars be electric by 2030 to 2040. This shift will undoubtedly increase the demand for graphite.
The demand for graphite will not only be driven by the auto manufacturers for electric vehicle batteries but also by solar, wind farm, geothermal, and other clean energies. These sectors will also cause an exponential demand for graphite.
The Rising Demand of Graphite and Expected Supply Imbalance
Benchmark Minerals states, “China currently controls 61% of worldwide natural graphite supply, 55% of needle coke production (as a precursor for synthetic graphite anodes), 98% of USPG supply, 68% of worldwide synthetic graphite supply, and around 90% of anode market supply across both natural and synthetic graphite chemistries”. This indicates a potential supply imbalance in the future, with the rising demand for graphite in the EV and clean energy sectors.
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In conclusion, Elon Musk's 'Nickel-Graphite' comment has brought attention to the crucial role of graphite in the EV industry. As the world moves towards clean energy and electric vehicles, the demand for graphite is set to increase exponentially. This highlights the need for a robust and sustainable graphite supply chain to meet the rising demand.