Further battery size optimisation can be achieved through widespread use of digitalisation and information and communication technology (ICT). As consumers and business opt into real-time monitoring and data on vehicle utilisation patterns become more available, it will be increasingly possible for original equipment manufacturers (OEMs) to suggest vehicles with a range that is appropriate to specific consumer driving patterns. This is likely to have its greatest potential for freight vehicles, where the calibration of battery capacity to the mission profiles of the vehicles can have a large impact in terms of cost optimisation, especially in well-managed fleets.

Instruments such as Scania’s connected service web portal, allow real-time tracking of truck positioning and usage profiles (Scania, 2019).These are extremely well suited to give insights into the status and performance of the fleet and individual vehicles to the customers of truck and bus manufacturers, as well as to provide useful information on usage patterns of customers to the OEMs. This can enable the offer of vehicles that are optimised to their needs and even the use of modular battery packs, capable of mission-specific requirements), speeding up the adoption of PHEV and BEV technologies.

A clear example is the case of fleet vehicles that operate in urban areas. Even today, battery electric vehicles with battery capacities and charging profiles in such fleets are very well suited to deliver net TCO savings in comparison with ICE and hybrid vehicles. Other examples include vehicles that have mixed use with significant portions of urban driving, which could fully transition to electrified operations for the urban operations via PHEV technologies, optimising PHEV battery capacities to enable all urban operations in all-electric driving.

Co-operative arrangements such as the coalition formed by E.ON, H&M group, Scania and Siemens to accelerate decarbonisation of heavy transport can be useful to build knowledge in this innovative area of technology development (Scania, 2018). They can help design, pilot and demonstrate new solutions that can be scaled up or adopted by other private sector stakeholders to foster the clean energy transition in transport.

Supply and value chain sustainability of battery materials

Challenges

The growth of a new major industrial sector inevitably leads to consequences for the material and supply chains. For the automotive sector, a transition from ICE vehicles to batteries and electric motors as the main components of the powertrain leads to structural change in the materials used. Challenges surrounding the supply chain of these materials will also gain in importance.

It is important that governments and the auto manufacturing industry develop the needed capacity to anticipate the risks associated with these changes and design strategies to manage them.

The main risks of raw or refined material supply are:

•Production-related (e.g. lack of reserves or resources,18 under-investment in production capacity, lead times for new capacity).

•Economic (demand/supply balance, including demand fluctuations and sudden disruptions, stockpiling, policies affecting production or import/export options).

•Geopolitical (highly dependent on national policies and strategies, and often exacerbated in cases of geographical concentration of extraction and/or refining).

•Social (impact on the well-being of communities at all scales, local, regional, national and transnational).

•Environmental (e.g. local pollution, supply chain related carbon dioxide (CO2) emissions, impact on local ecosystems and water resources, landscape destruction).

The importance of these risks often defines the criticality of a material and varies substantially from different stakeholder perspectives and in time (Hache et al., 2019). For instance, lithium is considered as critical in the United States (Bradley et al., 2017) whereas the European Commission does not assess it as such (EC, 2017a). 19

The future demand for materials for automotive sector will depend on the speed of the transition to electric mobility, as well advances in battery technology and chemistry.20 The materials needed in the largest quantities for battery packs using the most common battery chemistries are aluminium, graphite/carbon, copper, nickel, cobalt and manganese.21 An electric car contains about five-times more copper than an equivalent ICE car (ANL, 2018), as it is present in the battery, electric motor and wiring. Copper will also be needed in large quantities for power grid upgrades and infrastructure extensions for electric vehicle charging.

An issue that makes the sustainability of material supply chains difficult to ensure is the lack of identification and traceability of each stakeholder along the material value chains, from the mine to the end-product manufacturer, the OEM in the case of electric vehicles (IEA, 2018a). Their international nature and the diversity of local regulations and minimum reporting standards do not help to gain a clear view of the overall value chain. Gaps in the supply chain traceability lead to under-awareness of the social, environmental, corruption and conflict-related risks and hazards associated with each step of the value chain. The limited information for product manufacturers and their customers that results from these gaps in traceability of supply chain does not encourage action.

Figure 5.3. Main extraction and refining locations of key materials for automotive batteries

*Lithium Triangle = Argentina, Bolivia and Chile.

**US= United States; AU= Australia; DRC= Democratic Republic of Congo; NC= New Caledonia.

Notes: For extraction, all countries are reported based on 2017 data. For refining, data are based on 2015, 2016 or 2017 depending on the source. Each of the countries aggregated under other have lower material extraction or refining rates than the countries individually presented.

Nickel extraction and refining sites are shown here regardless of the class of the nickel. Nickel is supplied from sulphide ores and laterite deposits. The former are mainly used to produce class I nickel (>99% Ni content). Class II nickel (<99% Ni content) is mostly derived from laterite and currently driven by demand for stainless steel production. The choice to include all nickel supplies in the figure is due to the fact that a growth in nickel demand for EV batteries may lead to growing production of class I nickel from laterite deposits. On the refining side, the figure also shows shares for both class I and class II nickel. In 2016, class I nickel metal products accounted for 49% of the global nickel output and class II nickel (ferronickel, nickel pig iron and oxide) for 51 % and the main

class I nickel producers were the Russian Federation (20%), China (19%), Canada (18%) and Australia (12%).22 Sources: USGS (2019a), (2019b), (2019c), (2019d), CDI (2016); Sun et al. (2017)

Extraction of lithium and cobalt is particularly concentrated geographically. China is the main refiner of lithium, copper, cobalt and nickel.

Figure 5.3 highlights the main locations of extraction for a selection of materials used in vehicle battery production that are subject to higher criticality than others. It also provides the percentage of the current production which is refined in the People’s Republic of China (hereafter “China”), the main refiner for the materials studied.

Table 5.1 summarises, from a high-level perspective, the specific risks associated with a number of materials used in vehicle battery production.

Table 5.1. Main features and known risks associated with primary material supply for automotive batteries