China’s move yesterday to curb exports of graphite, a key electric vehicle battery material, will only accelerate efforts to develop alternative sources and materials. However, this will take time.
China, the world’s largest graphite producer and exporter, yesterday said it will require export permits as of December 1 for some graphite products, including spherical graphite used by automakers. The country refines more than 90% of the world’s graphite into the material used in almost all EV battery anodes, which is the negatively charged portion of a battery. China’s decision may escalate trade disputes globally and spur other countries to prioritise research into alternative sources and materials, industry executives said.
China’s move is also expected to act as a potential catalyst to highlight the urgency of improving US graphite supply .
Thought new investments in the US and Europe aim to challenge China’s stranglehold on graphite with a focus on developing synthetic graphite, the effort will be an uphill battle.
Synthetic graphite could account for nearly two-thirds of the EV battery anode market by 2025 as per estimates.
China battery materials giants have been investing hundreds of millions of dollars to produce more synthetic graphite. Though developing synthetic graphite production is an option for other producers too, it is a costly affair
Another anode ingredient is silicon, which enables an EV to drive longer distances before recharging.
The maximum amount of silicon added to batteries is about 10% because the material expands during use and can degrade the battery. But companies are working to push that share higher. US startup GDI, for instance, is developing 100% silicon anodes for batteries. GDI CEO Rob Anstey said his company is talking to most automakers about the technology.
“China is decades ahead in graphite and it’s too late to try and catch up,” he said. “We must move to the next level of lithium-ion and EV performance.”
“This is our time to wake up and say, okay we need to start working on the next generation of battery and of materials,” he added.
The curbs by China also could lower exports and raise prices, just like they did after a similar move in August for two chip-making metals, gallium and germanium.
“This regulation is expected to increase the scarcity of graphite, which in turn raises the cost of power batteries, leading to higher production costs for EVs,” Canalys analyst Alvin Liu said. Many automakers sell EVs at a loss, so higher costs would not be welcome. With rising EV sales, automakers are racing to lock in supplies from outside China, but shortages are looming. The main use of graphite has been in the steel industry, but EV sales are due to more than triple by 2030 to 35mn from 2022, according to forecasts.
Each EV on average needs 50kg to 100kg of graphite in its battery pack for the anodes, about twice the amount of lithium. Automakers were largely quiet yesterday studying the decision.
“We don’t expect short-term effects on our supply situation, but will watch the issue closely,” BMW said. “We could react quickly and flexibly in our risk management if necessary.” Volvo Cars and Renault said it was too early to comment, but they were following the situation closely.
Mercedes declined to comment, but said in June it was diversifying raw materials sourcing, including graphite. Stellantis and Rivian declined to comment.
Officials with Volkswagen, General Motors, Ford, Lucid and Fisker could not immediately be reached to comment.