Nickel Supply Woes: Innovations Steering a Sustainable EV Future

This December, the International Council on Clean Transportation (ICCT) released a report- “A Global and Regional Battery Material Outlook” that emphasized the critical need for major vehicle markets to achieve 100% BEV sales for new light-duty vehicles by 2035 and heavy-duty vehicles by 2040. This is in conjunction with the Paris Agreement’s target of limiting global warming to below 2°C. While progress lags behind this trajectory, many nations are setting ambitious targets and exploring new measures to accelerate vehicle electrification. This transition will drive a sharp rise in demand for batteries and essential materials like nickel, lithium, and cobalt.

Nickel Demand Soars with EV Batteries

Governments worldwide are adopting policies to expand battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) to combat global warming and air pollution.

The surge in EV adoption has significantly boosted demand for nickel, a key component in battery production. This analysis highlights trends in battery technology and the growing importance of nickel while exploring strategies to manage the demand for this material.

To begin with, let’s study the growth trajectory of electric vehicles as explained in the ICCT report.

Baseline projections estimate that global annual battery demand for road transport will grow from 808 GWh in 2023 to 3.8 TWh by 2030, reaching 7.0 TWh by 2040.
Light-duty vehicle (LDV) BEV battery demand alone is expected to increase ninefold by 2050, while heavy-duty vehicles (HDVs) will see a 24-fold jump.

Moving on nickel’s role in the battery landscape continues to evolve. The silvery-white metal plays a vital role in high-performance batteries like lithium nickel manganese cobalt oxide (NMC) variants. This variant has higher nickel content and unique features like better energy storage and vehicle range. Thus, as EV adoption rises, nickel demand is expected to soar.

The global nickel demand for EV batteries will reach 1.4 million metric tons (Mt) by 2030 and 2.2 Mt by 2040.

Image: Annual global demand for nickel under the baseline and demand reduction scenarios, all with the baseline battery technology share

Tracking Nickel Demand for Batteries Across Regions

China

Nickel demand for batteries in China is expected to grow significantly, increasing from 93 kt in 2023 to 273 kt in 2030 and 379 kt in 2040. This rise is mainly due to the emergence of high-nickel NMC variants, even when the overall share of NMC batteries declines. However, policy measures like recycling programs and the promotion of smaller battery sizes could help reduce nickel demand by up to 29% by 2050.

United States

In the U.S. demand for nickel demand is set to surge from 50 kt in 2023 to 359 kt in 2030 and 471 kt in 2040. This reflects rising sales of high-nickel, low-cobalt NMC variants, such as NMC811. Additionally, recycling and changes in cathode composition are expected to moderate long-term demand growth.

European Union

The EU forecasts demand for nickel to increase from 71 kt in 2023 to 353 kt in 2030 and 623 kt in 2040. High-nickel variants, including NMC811 and NMC955, will dominate the market. However, smaller battery sizes and recycling could cut demand by 29% in 2035 and 16% by 2050.

MUST READ: Powering the Future of Nickel with NMC 811 Batteries

India and Indonesia

Emerging economies like India will see a nickel demand surge, projected from 1 kt in 2023 to 20 kt in 2030 and 67 kt in 2040. Notably, industrialists predict that this growth will be driven by expanding BEV sales, especially two- and three-wheelers, and the adoption of high-nickel variants.

In Indonesia, nickel demand will climb from 0.18 kt in 2023 to 8 kt in 2030 and 27 kt in 2040. Indonesia’s rich nickel resources make it a top player in NMC battery production, potentially driving higher demand under NMC-dominant scenarios. On the contrary, a shift to high LFP market shares could reduce nickel demand.

Tackling Nickel Supply Challenges Amid Surging Demand

From the above study, we saw that high-nickel NMC batteries currently drive global nickel demand, with China, the United States, and the European Union leading this surge. However, advancements in battery technologies present viable pathways to reduce reliance on nickel.

For example, expanding LFP battery adoption could decrease nickel demand by 33% by 2030 and 21% by 2040 compared to baseline projections. Similarly, sodium-ion batteries, a promising technology with minimal nickel content, are expected to replace some LFP batteries. Thereby, further alleviating supply pressures.

These emerging technologies showcase the industry’s adaptability in overcoming supply chain challenges and addressing rising material costs. The growing shift toward diverse battery chemistries demonstrates the potential to balance material demand while maintaining electrification goals.

Strategies for a Sustainable Supply Chain

Ensuring a sustainable battery supply chain requires proactive strategies to manage nickel demand effectively. Key approaches include:

Material Innovation: Developing and scaling low-nickel or nickel-free battery chemistries like sodium-ion and solid-state batteries to reduce dependency on critical materials.
Battery Recycling: Investing in advanced recycling technologies to recover nickel and other valuable materials from used batteries, creating a circular economy.
Smaller Batteries: Promoting EV models with smaller battery sizes to optimize material use and reduce the strain on raw material supplies.

Boosting Domestic Battery Production and Mining Capacities

Financial incentives are vital for strengthening domestic battery production and supporting material supply chains. Policies like the U.S. Inflation Reduction Act (IRA) provide tax credits for battery manufacturing, while the EU’s Battery Fund aims to boost battery production across Europe. Similarly, India’s FAME scheme and Indonesia’s reduced VAT for EVs link purchase incentives to the use of local components, enhancing domestic supply chains. These initiatives connect financial support to local manufacturing, fostering self-reliance and industry growth.

A robust EV supply chain also requires upstream investments in mining and refining capacities. Under baseline scenarios, nickel mining is projected to meet 97% of global demand by 2030. ICCP predicts if LFP batteries gain more market share then nickel supply could exceed demand to adapt to the industry dynamics.

Disclaimer: Visuals and Data Source

ICCT: Battery Outlook Report 2024

Alaska Energy Metals: An Emerging Nickel Player

However, mining and refining capacities face challenges, such as long project lead times and regional concentration. Governments with domestic reserves can step in with financial support to expand operations. For instance, the IRA mandates that some critical EV battery materials must be mined, refined, or recycled in the U.S. or allied countries. This ensures stable material flows, secures supply chains, and strengthens local economies.

By diversifying mining and refining capacities while promoting alternative battery chemistries, the industry can balance growth with sustainability and resource conservation.

Significantly amid all these challenging market conditions, an emerging player is targeting U.S. nickel independence. Alaska Energy Metals Corporation (AEMC) is leading efforts to support the U.S. energy transition through its flagship Nikolai project in Alaska. The site holds a significant resource of nickel, copper, cobalt, and platinum group metals. And the Canadian Nickel Junior is sourcing them sustainably.

Thus, a company like AEMC will play a significant role in reducing U.S. reliance on imports with robust exploration plans for nickel and other critical minerals.