For international automakers dealing with a lack of EV (electric vehicle) battery materials, Chile’s decision to nationalize its Li (lithium) industry has added new supply chain instability. Finding new sources of the metal might become more important as a result. The creation of a new state-owned firm to oversee Chile’s lithium business was announced last week by President Gabriel Boric of Chile.  

This South American country produces 30% of the world’s output and has the biggest metal deposits in the world. While some businesses are developing sodium ion (Na+) or SIB batteries that may one day offer cheaper alternatives for electric vehicles, the auto industry will continue to be totally dependent on lithium for many years to come.

Chile’s decision to nationalize its Li (lithium) industry has added new supply chain instability

Leading business executives have warned of a supply chain crisis around the middle of the decade as the biggest automakers in the world intend to spend roughly 1.2 trillion dollars through 2030 to develop and produce millions of electric vehicles. According to the officials of Benchmark Mineral Intelligence, automakers may be reluctant to commit to Li supply agreements with Chile until it is apparent how nationalization will be implemented.

Before this, the majority of automakers would have sought a diverse portfolio of regional suppliers, but now perhaps other regions are more interesting. Battery metals are becoming as strategically significant to countries as oil, according to David Brocas, the founder of Voltaire Minerals, a mineral supply chain advisory firm. As a result, carmakers will need a unique, diversified sourcing strategy.

The US, Africa, and Europe have already been searched by major automakers for fresh Li (lithium) supplies. For example, in January, General Motors invested in Lithium Americas Crop and will work with it to improve the Thacker Pass lithium mining method in Nevada. The demand for new solutions is anticipated to increase.

Without lithium, there would be no batteries and no electric cars

The chief technology officer of Mercedes-Benz stated that although there are other options, such as Canada and Australia, the automaker is still willing to do direct business with Chile. shares of Australia’s largest lithium producer, which supplies about half of the world market. Without lithium, there would be no batteries and no electric cars.

The decision by Chile to nationalize its lithium business continues a global trend of nations attempting to gain more control over vital resources. Mexico has nationalized its lithium business, and Zimbabwe, Myanmar, and Indonesia have all imposed limitations on a variety of goods. For automakers who are trying to get raw materials for electric vehicles, it will place an even greater emphasis on securing supplies of lithium in Europe and the United Kingdom.

The automotive industry has had supply chain issues before, including a shortage of semiconductors during the COVID-19 pandemic. Lithium (Li) is not the industry’s first such issue and is not expected to be its last. Though 70% of the world’s graphite now originates from China, several startups are working to produce electric vehicle batteries with silicon-based electrodes that contain more energy, have a longer range, and charge more quickly. Aterian, a firm that exports lithium, believes that mining is feasible in several African nations, including Rwanda and Morocco.