The switch to electric cars increases our dependence on China

Since the advent of the indus­tri­al rev­o­lu­tion, the pro­duc­tion meth­ods and needs of our soci­eties have reached such a thresh­old that it would seem almost impos­si­ble to turn back the clock. “We often hear that the ener­gy tran­si­tion is very dif­fi­cult,” explains Maria Euge­nia Sanin, asso­ciate researcher at Ecole Poly­tech­nique (IP Paris). But the truth is that we have no choice.

Numer­ous sec­tors are there­fore in the fir­ing line for an effec­tive tran­si­tion. How­ev­er, efforts need to focus on one of the most impor­tant sec­tors in terms of green­house gas emis­sions: trans­port (cars account for 16% of French emis­sions). “Trans­port accounts for a large pro­por­tion of car­bon emis­sions,” says Olivi­er Per­rin, part­ner in the ener­gy, resources, and indus­try sec­tor at Deloitte. “That’s why we looked at the dif­fer­ent ways of decar­bon­is­ing it.”

As a result, a great deal of atten­tion is being paid to elec­tric cars. “They say that the com­ing decade is the decade of bat­ter­ies,” says the researcher. “But to pro­duce these bat­ter­ies, we need graphite, cobalt and, to a large extent, lithi­um.” If you con­sid­er the entire man­u­fac­tur­ing process for these cars, and the raw mate­ri­als required, the ben­e­fits no longer seem so obvi­ous. From the extrac­tion of raw mate­ri­als to the final assem­bly of the vehi­cle, the move to elec­tric vehi­cles rais­es sev­er­al issues, both eco­nom­ic and geopo­lit­i­cal, not to men­tion ecological. 

“From an eco­nom­ic point of view, there are three mar­kets for raw mate­ri­als,” explains Maria Euge­nia Sanin. “First there’s the upstream mar­ket, then the down­stream mar­ket and, in between, the mid­stream mar­ket.” The upstream mar­ket includes the resource extrac­tion stage. The mid­stream mar­ket cor­re­sponds to the pro­cess­ing stage, such as refin­ing, of these resources. Once processed, they can be used in the design of var­i­ous objects, such as the assem­bly of bat­ter­ies – this is the down­stream market.

The car­bon impact of an elec­tric car is not just that of its use. The whole process, and each of the stages that make it up, emit green­house gas­es to a greater or less­er degree. What’s more, the out­come of this type of lin­ear process depends on the stages pre­ced­ing it: if the upstream mar­ket is obstruct­ed, the down­stream mar­ket can­not take place. “There is a major geopo­lit­i­cal issue here,” she insists, “because Chi­na dom­i­nates the upper parts of this mar­ket [the upstream and mid­stream mar­kets], par­tic­u­lar­ly for lithi­um, which is essen­tial for bat­tery man­u­fac­ture. So, the devel­op­ment of oth­er large-scale mar­kets depends on mate­ri­als that are cur­rent­ly dom­i­nat­ed by a sin­gle region.”

There are 4 stages in the man­u­fac­ture of bat­ter­ies for elec­tric cars: the first is the extrac­tion of the var­i­ous raw mate­ri­als. The sec­ond is the pro­cess­ing (refin­ing) of these mate­ri­als. Next comes the cre­ation of the anodes and cath­odes. The fourth and final stage is the final assem­bly of the bat­ter­ies. “When we analyse the mar­ket and take all the stages into account, we realise that we are depen­dent on Chi­na,” insists Olivi­er Per­rin. “As far as ores are con­cerned, the glob­al break­down is accept­able, because we have 10 to 15 coun­tries involved. But when it comes to pro­cess­ing, there’s no doubt that Chi­na is a very strong leader. As far as anodes and cath­odes are con­cerned, Chi­na has more than 50% of the world mar­ket. When it comes to the final assem­bly of a bat­tery, Chi­na has 70%.”

This geopo­lit­i­cal chal­lenge is cou­pled with an eco­log­i­cal one, as Chi­na’s ener­gy is high­ly car­bon-inten­sive (over 50% comes from coal). Its indus­try, and there­fore the elec­tric car indus­try, emits a lot. “The car­bon foot­print from man­u­fac­ture to use of an elec­tric vehi­cle is quite sig­nif­i­cant,” he adds, “and the ben­e­fits com­pared with inter­nal com­bus­tion cars are not so obvi­ous. For this to be the case, the vehi­cle would have to be used quite extensively*.”

Accord­ing to Maria Euge­nia Sanin, “Europe has not invest­ed suf­fi­cient­ly in the upper end of the mar­ket”, i.e. upstream and mid­stream. As a result, the sup­ply of raw mate­ri­als will not be able to keep pace with Euro­pean demand. “To give an exam­ple,” she adds, “demand for lithi­um is pro­ject­ed to expand by more than 20% a year between now and 2040, while sup­ply will not be able to expand to that lev­el with­in 5 years.”

On the oth­er hand, the Euro­pean Union has recent­ly made an effort to bet­ter equip itself for the down­stream mar­ket. Projects for gigafac­to­ries – giant fac­to­ries ded­i­cat­ed to mak­ing bat­ter­ies and motors – have been launched in Europe. “Two have already opened, one in Ger­many and the oth­er in France. These are still assem­bly plants,” insists Olivi­er Per­rin. These plants will have to buy the com­po­nents to assem­ble the batteries.

To break away from our depen­dence on Chi­na, the Deloitte con­sul­tant is pin­ning his hopes on recy­cling. “Work on the sec­ond life [recy­cling] of bat­ter­ies is very impor­tant,” he says. “Europe absolute­ly must be a major play­er in this field.” Becom­ing such a play­er would enable the Old Con­ti­nent to break away from the Chi­nese mar­ket. Espe­cial­ly giv­en the tar­get set for 2035 – name­ly that Europe will no longer pro­duce com­bus­tion engine vehi­cles in its fac­to­ries – Olivi­er Per­rin main­tains: “We risk see­ing the end of the Euro­pean auto­mo­tive industry.”

The con­sul­tant believes that Europe still has a chance, pro­vid­ed that each of its mem­ber states acts hand in hand. “The Euro­pean car indus­try, if it is capa­ble of join­ing forces, can total­ly com­bat the Chi­nese, Amer­i­can and Japan­ese indus­tries, » he asserts. If every­one goes it alone, I don’t think we stand much of a chance.”

Pablo Andres

*After pub­li­ca­tion, a fac­tu­al error was cor­rect­ed in this arti­cle on 1st Octo­ber 2023. The orig­i­nal ver­sion stat­ed that “to have an obvi­ous­ly low­er car­bon foot­print than a com­bus­tion car, a vehi­cle would have to be used 20,000 km/year.” As this fig­ure was incor­rect, it has been deleted.