• Aug 24th 2008 at 12:31PM
  • 24
Uh-oh. In the pell-mell race to develop lithium-ion batteries for plug-ins, EV's and hybrids, has any automaker taken a hard look at where all that lithium is going to come from? Guess what? Not only are global lithium supplies pretty tight, prices are about to skyrocket.
Today, the United States imports almost all of its lithium. We get most of it from Chile, then Argentina, and a little bit from Canada and Zimbabwe. The only producer in America is actually a German company, Metallgesellschaft, which has a mine in Nevada. Yet, even though we import most of our lithium, the United States is the world's largest processor of the material.

John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.

But a lot of others want to get in on the game. China, no surprise, is emerging as a major player. It's buying all the lithium it can from Australia. China does have some lithium sources of its own, but they're mainly in Tibet. (Say! Do you think that's another reason why they're so hard-core about keeping Tibet within the People's Republic?)

Right now, all lithium producers around the world are running flat out, and plans are afoot to ramp up production dramatically. But while there's a lot of lithium in planet Earth, I'm told that it's kind of like oil shale: it's there, but it's not cheap or easy to get.

And there are other competing demands for using lithium, like in producing ceramic, glass and aluminum. And for air conditioning systems. It's even used by the pharmaceutical industry for treating depression. Now the auto industry wants to start using huge amounts of it.

"Demand will soon outstrip supply. We're going to see prices spike," Christian M. Lastoskie, Ph.D., of the Department of Civil & Environmental Engineering, at the University of Michigan, tells me.

You'd think that such a valuable material would get recycled a lot, but that's not the case. Today, only 3% to 4% is recycled, and while that will probably increase, it won't increase a lot. Recycling lithium takes a lot of energy, so much so that recycled lithium costs five to six times more than getting it from virgin material.

That could prompt battery researchers to search out other alternatives for advanced batteries, but so far not much has happened. "Everyone searching for alternatives keeps coming back to lithium because it offers so many advantages in weight and storage capacity," says Lastoskie.

It sure looks like the auto industry is locking itself into a future that depends on a precious resource, which is in tight supply, and that has to be imported. I'm just asking folks, but in our rush to get better fuel economy are we about to replace one form of dependency for another?


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    • 1 Second Ago
      • 7 Years Ago
      The points brought up in autobloggreen on this topic is very important. How much does the price of lithium determine the price of the lithium-ion batteries? In other words, how much lithium is in a lithium-ion battery? If it's not a lot then this might not be an issue even if prices rise 5-6x (recycling).

      According to them, lithium only makes a small percentage of the cost in a lithium battery. In traditional li-ion, the cobalt makes up 60% of the cost. Of course none of the major automakers are using li-cobalt batteries so the cobalt doesn't affect them as much. So there still stands a good chance of lithium batteries decreasing in price given there are so many alternatives besides from cobalt.

      Keep in mind batteries are not like gasoline. I see so many people drawing this comparison but it's not right b/c the battery is supposed to last the life of the vehicle while with gasoline it constantly needs replacing. We aren't using up lithium in anywhere near the amounts we are using oil. Also even at 5-6x cost, lithium is at least still recyclable, but you can't recycle gasoline.
      • 7 Years Ago
      By the way who here agree with Johns guests, BMW 1 or GTR?

      In my good the best car of the year is Challenger.

      I also would like to add that John McElroy is a great guy, i love his show. I record his show on my DVR every week, also why not make the show 1 hour long?

      Now for some criticism, i would like John to invite only TWO guests to every show, anytime there are 3 people or more i feel like neither can get their point across.
      • 7 Years Ago
      Hey Brian i totally agree, let's kill CAFE and let's go back to 9 MPG sedans. While we at it let's kill all laws that protect air or environment. I for one am tired of swimming in clean water, i want to swim in chemicals and human excrement.
        • 7 Years Ago
        What's the mpg of that car in your avatar?

        CAFE was behind the times when it first came about, may be again. Demand for fuel efficient vehicles will drive out the real fuel sippers, not CAFE. CAFE may affect which cars they try to dump on rental fleets.
        • 7 Years Ago
        sarcasm much?
        • 7 Years Ago
        Cute sarcasm. Have you ever considered that while CAFE is one answer, it's just not a particularly good one? IMHO, CAFE and its defenders are both too ambitious and completely unrealistic. In this case, your reply demonstrates both qualities. Well done.
      • 7 Years Ago
      Nice. Have you ever considered that CAFE may be one answer, but it's just not a particularly good one? IMHO, CAFE and its defenders both seem to be too ambitious and completely unrealisitic. Your reply demonstrates both qualities beautifully. Well done.
        • 7 Years Ago
        "Have you ever considered that CAFE may be one answer, but it's just not a particularly good one?"

        Are you saying an unfettered market is a better answer? If you don't have a better solution, perhaps you should stop whining about the solution that has been put in place. I've heard this a million times before and I'll say it again. The market is not a good predictor of the future. When Ford was reaping profits in the late 90's and early 2000's on large SUVs neither the consumer of those vehicles nor even Ford predicted that during the service life of that vehicle would gas hit $4/gallon. However with a stronger CAFE requirement, higher gas prices are anticipated. This forces corporations who are only thinking maybe two years in advance to also do some long range planning. Without CAFE, the automakers would make cars that seem fuel efficient at $4/gallon but won't seem that efficient if (when) gas hits $6/gallon.

        People here really like to rip CAFE but forcing the automakers to offer more fuel efficient vehicles is actually a good thing for consumers especially when gas hits $6/gallon. Contrast that with people who bought Suburbans and F-250's who can no longer afford to drive them beyond the absolute minimum because of fuel prices that the (all-knowing) market didn't predict.

        I fully support CAFE and the automakers that can adapt to it will survive and those that can't will fail. It IS the new market reality. CAFE assumes that gas will only get more expensive and that is a very good assumption. Ford and GM bet that gas would stay cheap. They bet wrong and now want low interest loans from the government (taxpayers) to help bail them out. I don't call that a free market either.
        • 7 Years Ago
        I'm not understanding why everyone is complaining about the CAFE standards being "unrealistic and overambitious". My understanding is, isn't the CAFE standards are the average mpg for the company's fleet? The problem is, as BMW, Mercedes and Audi have recently pointed out, the average suffers because of an overabundance of SUVs and crossovers in the lineup. Is it truly necessary to have the upcoming X1, X3, X5, X6 and the cancelled X7 in the lineup in lieu of the changing fuel efficiency debate in the auto industry. I know these products are years into development by the time they reach production, but still, it just seems like all the companies want to whine and complain about the CAFE changes because they have no interest in adaptation. Obviously, that means millions of dollars down the drain in product development, which I suppose would be a reason to not want change, but wouldn't the automaker stand to lose billions because of product, such as rather inefficient SUVs and CUVs not moving off of the lots as what's happening now?

        Honest inquiry, I just figured I'd pose the question because of the blog topic.
        • 7 Years Ago
        No, I'm not suggesting that an unfettered market is the answer either. However, at this point the legislators are writing checks that the engineers don't seem to be able to cash.

        I'll agree that these storm clouds have been building for a while. Around 2000, when Ford et. al. were puking out SUVs at an alarming rate, it didn't take a tremendous amount of foresight to see that the automakers were reaping a short-term gain and simultaneously heading for a major long-term fall. Perhaps the pinnacle of arrogance was the unveiling of the H2 as oil prices started spiralling upwards.

        But I find the notion that I somehow need the government to protect me from buying a big, bad truck a bit condescending and more than a bit offensive. I don't need a full-size truck. I really don't want to spend $100 or more to fill the tank. So what do I do? That's right! I don't buy a full-size truck! And I really don't feel sorry for those taking out a second mortgage to keep their Excursion on the road or taking the meteoric depreciation hit.

        CAFE gives every appearance of being a sort of legislative response to somebody screaming "Don't just stand there, do...SOMETHING!!!". Well, they did. And it was rash, reactive, ambitious, and unrealistic. I can't take credit for the following quote, but it does seem to fit the topic at hand:

        "Government: If you think the problems we create are bad, just wait until you see our solutions."
      • 7 Years Ago
      First speculators drive up oil prices, and now they are going to drive up lithium prices.
        • 7 Years Ago
        Bruno -
        I'm sure there are a lot of highly qualified professionals in your area who could help you with you anger management issues. Based on your little rant, I would seek their help immediately.
        • 7 Years Ago
        A guy named "bruno" with anger issues, who would of thought?
        Go back to breaking legs and busting heads, writing is not your strong point.

        • 7 Years Ago
        Let me guess. You don't have a pot to whizz in, and you're jealous of those who have saved instead of spent so that they have money to invest.

        I agree with the other poster. It's called capitalism. And it's why you're not typing your drivel on a computer with the capability of a 1982 Atari.

        Some things in life are scarce. When you suddenly require more of something, the price goes up. Fact of life. Grow up and deal with it.

        If you force suppliers to keep prices steady, we get.....NOTHING...becuase you just killed their incentive to go invest to find and extract it. All "speculators" are doing is taking the risk of buying it now at a slight premium.

        If you're so worried, why not buy some lithium futures or stock in producing companies yourself? Oops, you can't, you spent all your money on Starbucks and trips to socialist summer camp.
        • 7 Years Ago
        Evil "speculators" are the root of all our woes, isn't that right.

        If you've ever purchased anything with the intention of it having an expected value later, than you're an evil speculator too. Have a 401K? Own a home? Classic car? Mutual fund?

        Guess what, you are evil too. It's called capitalism, and speculation is literally what makes the markets work.

        The falling value of the dollar, along with steadily growing dependence on foreign oil are what drove the price up, not some evil 80's stereotypical Michael Douglass Wall Street type.
        • 7 Years Ago
        Speculators are a very easy target for people who don't understand basic economics.

        In a free market, speculators serve a very important purpose, they smooth out prices for scarce goods over time.

        When it becomes clear that the auto industry is going to use more lithium than can currently be supplied, speculators buy it today, driving up today's prices and causing people and companies who don't really need it to find alternatives, leaving more for for the industries that really need it. The prices move up gradually rather than rapidly, which is far better for the economy than a sudden spike, which can lead to shortages of products.

        Yes, it sucks for the prices to go up, but pricing is the best and most efficient method we have of resource allocation. Speculators take risks; if they guess wrong, they lose a lot of money.

        • 7 Years Ago
        Sorry to break it to you RWD fan and Bruno. Your arguments don't hold water especially in light of what has happened in the oil market. Speculators who had nothing to do with supply or consumption are partially responsible for the high rise in oil prices. Since the commodities market for oil does not require that anyone actually take delivery of the "oil" the purchase, they can artificially drive the price of oil up without actually seeing an increase in consumption. If the oild commodities market were regulated like other commodity markets, then "paper" oil purchases wouldn't be allowed and the price would be much more tied to supply-demand rather than speculation. Luckily, eventually, supply and demand will force even speculative markets to re-adjust to reality over time. Still that doesn't help consumers while that speculative bubble is happening. If you're going to buy anything speculatively, you better know what you're doing or at least know more than the next guy.
        • 7 Years Ago
        @RWD fan, @ Bruno: Thanks to 11th-hour legislation pushed through congress+senate by the Boy Scouts at Enron (+a few others, I'd imagine) ICE Futures and OTC are Largely Unregulated traders/markets of oil futures. Fix that & prices Will come down.

        While free markets don't benefit from socialist boa-constrictor regs, Everybody benefits from the ~50% solution.

        The average joe does not usually deviate far from the status quo behavior, which is why specs can surf on things a bit and drive them up. -Even if the market for suvs craters.

        If the guys here: http://www.globalresearch.ca/index.php?context=va&aid=8878
        are even HALF right, those specs have been surfing for awhile.

        ++ExxonMobil makes so much $$$ in-part because they're the only company that had the full spectrum from exploration-drill-transport-refine-distribute-sell, until recently when they dumped their gas stations.

        What would be more beneficial to everyone is getting bacteria or algae to kick out ready-to-go BioDiesel, instead of the inflationary eco-disaster that will be the heavy-metal-based battery future.
        • 7 Years Ago
        Gee, I wish I could tell that much about a person's character and socioeconomic status from a two-sentence post

        :rolls eyes:
      • 7 Years Ago
      @ Both Brian and Brian Reid

      Look you guys are right, market determines what cars are bought and sold. If gas is cheap people buy large, if not small. But market doesn’t take into account the quality of air, pollution, sooth particles or Global Warming. Government has responsibility to the people, not car companies, meaning would be as benefit if air became dirtier and dirtier, sure we’d all be driving V10 powered SUVs but air would be atrocious. I’ll give you a good example, Soda bottles, plastic soda bottles are great, they are comfortable, you can take them anywhere, and they do not break and they have other benefits. So why does government burden soda makers with recycling these bottles? Why does government force soda makers to pay people for recycling these bottles? Because these bottles affect society at large, if government did not force soda makers to recycle streets would be filled with these bottles, but we would be able to guy a soda bottle in every shape and size. Recycling affects people who buy soda bottles as well as those who do not.

      Two you talk about GM cutting cars that petrol heads want, OK possible, but hey look at Honda, they are bringing NSX back, a super car that probably will get 12 MPG. Why? Because Honda makes enough fuel efficient cars to offset any car that a petrol head wants. In other words if GM made sure that Malibu got 2-3 MPGs more it would more than offset any decrease of MPG from big displacement sports cars which sell in small volume.

      “Every industry expert knows that CAFE isn't the answer to solving fuel problems. Why don't you?”---OK Bob Lutz and Rick Wagoner are not industry experts. Industry experts make money in any environment.

      “And to think about it, maybe if CAFE was cut out, they could spend more money on research for alternative energy. How about that.”---------------So you saying take away every incentive possible from car companies to make more efficient cars, and they will build more efficient cars?
        • 7 Years Ago
        Mike - Only one point of contention. Soda bottles are not a good example ( I get your point though).

        1. Government does not require Coke and/or Pepsi to recycle. Local governments may require YOU to recycle but not the companies.

        2. Companies LOVE to recycle. Plastic bottles (unlike Lithium) is more cost effective to recycle than produce new. Same goes for aluminum. But remember even when you recycle you have to inject some new material to keep the cycle going.

        3. Even leaving out the enviroment recycling just makes good business sense it (also makes sense for consumers) to help control materials prices.
      • 7 Years Ago
      Looks V8 to me...
      • 7 Years Ago
      Yet again old man McElroy hates some concept that's long been discussed and debated... And, yet again, it involves the market moving in a new direction. This man fears change like a cat fears water.
      • 7 Years Ago
      I'm far from an expert on Lithium-Ion batteries, and have no reason to think McElroy wouldn't do his homework. That being said I was led to believe there was a pretty large difference from a "lithium battery" (as stated in the very title of his article) and the lithium-ion type that we are concerned with in automotive use (that the article goes on to discuss...kindof). I realize that the misstatement only lies in the title and was probably just a mincing of words. Maybe someone with expertise could explain how much lithium is actually needed to produce a lithium-ion battery (percentage wise)? Does it actually use raw lithium as a lithium battery does? Seems as though if people are worried about speculation of the lithium market it would be fair to assess how its actually used in a lithium-ion battery.
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