Is Copper the New Lithium?
As the world goes through an energy transition, demand for certain materials and metals has considerably increased over the last few years. With supply struggling to keep up with the demand at times, it is having an impact on final costs. In the case of EV batteries, up to 80% of the final battery price is accounted for by the materials and metals they are composed of.
Among the components is copper, a metal whose cost, supply and demand have all greatly increased. This has led the industry to wonder if a looming copper shortage is coming and how this will impact the EV industry. Indeed, acting now has become crucial to find technologies that can reduce the costs of copper in EVs. Consequently, certain battery companies have already started adopting new technologies and manufacturing techniques to help reduce the amount of copper in batteries and hence, to reduce their costs.
The Cost of Copper
Currently, the cost of raw materials that go into a standard lithium-ion battery, mainly on the cathode side, account for 70%-80% of the final price of a cell, a sharp increase from 40% in 2015. The price of copper itself has almost quadrupled over the last 20 years, going from below $1 per pound in 2000 to over $4 in early 2023. Indeed since the start of the pandemic, it has mainly been on an upward trend with the days of dropping below $2 far away.
The Price of Copper between 2000 and 2023
Copper Supply and Demand
New Copper Production
Technological shifts in electrification and the energy transition have triggered an increase in the demand for copper. Indeed, today’s energy-transition demand is demand from industries such as transport seeking to reduce its reliance on finite fossil fuels. As a result, the demand for copper may exceed the supply by more than 6 million tonnes annually by the early 2030s as it is expected to increase by 56% from 25 million metric tons in 2021 to 39 million metric tons by 2040.
However, the current mine rate is not high enough to meet copper’s 2040’s predicted demand and the metal’s growth trajectory is facing a significant hurdle. By 2040, it is expected that primary copper production could rise by approximately 16%, a number significantly below the predicted 56%. This means that the increase in copper production will heavily fall short of the demand.
Recycled Copper Production
Secondary copper production, achieved by recycling previously used copper, currently completely meets the 4.6 million-ton-per-year gap between primary production and demand as industrial copper scrap is readily available. However, consumer scrap is more difficult to predict and ends up being harder to rely on. Furthermore, due to the slow growth in global copper production, new mines will be needed in combination with improved recycling facilities. Consequently, severe copper shortages are to be expected by 2040 if no new mines are bought online and recyclers don’t increase their operations.
Copper in EVs
The expansion of EVs combined with the acceleration of electrification will be a key driver of the demand for copper over the next two decades. Indeed, copper is a crucial metal for energy transition due to its effective electrical and thermal conductivity. As a result, the transport sector is set to replace the construction sector as the biggest copper user in the 2030s.
Currently, copper accounts for up to 12% of EV batteries, making it one of the main components. As its price continues to increase, this will bring the final cost of the battery up leaving OEMs with either smaller margins or the obligation to bring the final EV price up. As a result, battery makers are spending time and energy to find a solution that will allow them to reduce copper and save on the raw cost of the battery.
EVs in Numbers
In 2021, 6.6 million EVs were sold across the globe, more than twice the 3 million amount that was sold the previous year. Indeed, EVs accounted for 9% of the global car market two years ago, and 139 million EV sales are predicted to take place by 2040. In Europe alone, EV sales are expected to increase more than sixfold by 2040 from 2.4m in 2021 to 15.1m in 2040. Similarly in the US, it’s thought that 83% of new passenger vehicle sales will be electric by 2040.
Copper in Numbers
While countries in Europe including the UK and the US previously recorded fairly flat copper demand, it will increase as EV adoption grows. Indeed, each EV requires on average 83 kg of copper, 3.7 times more than traditional ICE cars. Whether it’s through the demand for more power transmission, the energy transition or the increasing EV demand, the expansion of EVs is expected to create an important strain on the supply of copper. This could lead to a demand that could start exceeding supply. And result in a shortage combined with a price increase.
Reducing the Amount of Copper in EVs with Addionics
As raw materials are a major determinant of EV batteries’ overall cost, they are considered to be one of their most important aspects. Currently, copper is one of the most expensive components of the battery. Addionics’ 3D structure enables more materials to be embedded, reducing the amount of metals needed. Indeed, by using less copper, this reduces the final cost of the battery and consequently EVs, making them more affordable, increasing their adoption, and decreasing dependence on fossil fuels. Indeed, as global inflation looms, consumers are slowing down on their spending, with less people able to afford EVs. Recently, this resulted in Tesla slashing its prices amid slowing demand for EVs and the introduction of new EV tax credits that are met with strict price caps.
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