The electric vehicles market: challenges and opportunities on the horizon
The global desire to curb carbon emissions has seen a surge in demand for electric vehicles and the batteries that help to power them. Industry data suggests the market for electric values will grow to nearly USD 100 billion by 2029, from just under USD 50 billion today.
The demand for batteries is increasing due to the need to reduce climate change through electrification of mobility and the broader energy transition. The entire lithium-ion battery chain, from mining through recycling, could grow by over 30 percent annually from 2022 to 2030, reaching a value of more than $400 billion and a market size of 4.7 terawatt hours.
As the demand for electric batteries has risen, so too have concerns about the environmental impact. Indeed, research highlights how the shift towards electric vehicles has seen growth in emissions during production that partly offsets the lower emissions during the vehicle's lifetime. There have also been concerns raised about the water-intensive mining practices required to extract the lithium used in modern batteries, with estimates that in Chile, 65% of the region's water is used in the mining of lithium.
These concerns prompted the Global Battery Alliance to release a report in 2019 outlining how the battery value chain could be made more sustainable while also acting as the key driver in ensuring that road transportation is decarbonized.
"To produce these batteries responsibly and sustainably means lowering emissions, eliminating human rights violations, ensuring safe working conditions across the value chain, and improving repurposing and recycling, the report explains."
There are also concerns about the recycling rate for lithium-ion batteries, which is estimated to be around 5% in the United States, versus approximately 99% for lead-acid batteries, such as those seen in traditional internal combustion engines. This not only creates issues around the safe storage of waste products but there is also a lack of circularity in the process, which results in precious materials that could be reused going to waste.
At Avery Dennison, we are committed to operating a sustainable business and pursuing 2025 sustainability goals. We are also set to announce a number of new sustainability goals for 2030 that will work alongside our existing 2025 targets. We are implementing these to ensure that we are operating as sustainably as possible and showcase our commitment to being a sustainable business.
Meeting the demand
Sustainability in the battery sector is not only a matter of emissions and recycling, however. The growth in demand for electric vehicles has also seen concerns raised about the supply of the raw materials required to make key components. For instance, a report from the Advanced Propulsion Centre UK last year highlighted the possible shortages in the supply of lithium. Indeed, the authors argued that just 60% of battery demand would be met if existing plans for lithium projects are on stream by the end of the decade.
There are also concerns about the supply of cobalt and other key ingredients used in the production of cathodes, although those concerns have been assuaged by a jump in production in Democratic Republic of the Congo and new supplies coming onstream from Indonesia.
Graphite is another key component of modern batteries, and demand for the material is predicted to triple by 2030, raising concerns about the ability of miners to meet this soaring demand. Many of these raw materials are also mined in places with questionable human-rights records. Couple this with policy and regulatory moves to give preference to components that are both produced locally and sustainably and the need to understand precisely how batteries are produced has never been greater.
In response to these issues, the Global Battery Alliance proposes a "battery passport" to document not only where each component in a battery has come from, but also where they might end up. The GBA was created at the World Economic Forum in 2017 to ensure a sustainable battery value chain. The public-private partnership brings together stakeholders from across the sector, including Non Governmental Organizations, international organisations, academia, governments, and industry players.
"Digital battery passports (DPP) may stimulate the transition towards more sustainable production and consumption systems – if they were to contain the product life cycle data which is truly needed by decision-makers along the value chain," the University of Graz's Katharina Berger and Josef-Peter Schöggl explain. "
That said, it is important to take into consideration the holistic value chain actor perspective to understand their sustainable product management decision situations and consequently DPP use cases, as well as their willingness to share information via such a tool.
The aim of the initiative is to help ensure that the growing demand for electric vehicles can be met in a responsible, ethical, and sustainable way. The GBA believes that the variety of stakeholders involved in the project helps to align the various interests present along the entire value chain, and it hopes that this breadth of involvement will result in a Battery Passport that people can have trust that the environmental, social, and governance requirements of the sector are being met in full. The battery passport will help to achieve this by facilitating the transparent tracking of the battery throughout its lifecycle, while also helping to validate its performance.
This can be especially valuable in terms of the reuse of valuable raw materials, which should be able to be both recovered and then reused more effectively as a result. The GBA also believes that the introduction of a more circular value chain for batteries would enable a reduction in emissions across the power and transportation sectors of around a third, which would enable them to meet the commitments set forth in the Paris Climate Accord.
The battery passport works by creating a digital twin of each physical battery which allows for the secure sharing of information and data about each battery via the battery passport platform. Each battery will receive a unique identifier and accompanying features and information. This data will then be shared on a discretionary basis to try and extend the life of each battery; better enable it to enjoy a second life; reduce any costs associated with recycling; and ensure a successful, closed-loop management of each battery.
"The battery sector is undergoing significant transformation with the shift towards electric vehicles, Max Winograd, vice president of digital solutions at Avery Dennison, explains. "
All batteries large and small fall under the GBA and require innovative solutions that can be leveraged at scale. We’re looking forward to helping our GBA partners make the industry safer and more sustainable through our knowledge of supply chains and sustainability enabled through technology, and involvement in DPP-focused working groups.
This ability to understand the impact of each battery throughout the lifecycle in an open and transparent way is why we joined the GBA. We are applying our knowledge of digital product management and our extensive experience in efficiently overseeing a vast array of products for our clients to contribute to the further development of the DPP.
About the author
Martin Dolezal is a seasoned marketing manager with a focus on automotive and energy storage within the Materials Group EMENA. He overesses the self-adhesive product portfolio catering to the evolving industries of automotive, energy storage, EVB, durables, and aerospace.
Martin joined Avery Dennison in 2009 as a technical sales specialist based in the Czech Republic, evolving into a leader of a technical sales organization in Eastern Europe, Mena, Russia. Since joining EU headquarters 2017 he has served in various manager roles, leading the charge in shaping the strategy and positioning for Avery Dennison’s paper and variable information (VI), special papers, and digital portfolios.
Prior to joining Avery Dennison, Martin worked for one of the largest converters in the Czech Republic developing automated labeling machinery for multinational B2B partners, which provides him with a customer-centric perspective that he brings to his role.