In this article, we will explore the impact of these tensions on the Supply and price of Precious Metals used in electric cars.

The Role of Precious Metals in Electric Cars

Electric cars rely on several precious metals to produce their batteries and other essential components. Lithium, cobalt, nickel, and manganese are among the most commonly used metals in these vehicles.

• Lithium is a key component in lithium-ion batteries used to power electric vehicles.
• Cobalt is a critical material used to create the cathode in car batteries. It increases the lifespan and safety of the battery.
• Nickel is used in the battery, the electric drive motor, and other parts of the vehicle.
• Manganese is also used in battery cathodes and contributes to the durability and safety of the batteries.

Without these metals, electric vehicles would not be able to function or be as efficient as they are today, making them an integral part of modern transportation.

The Impact of Geopolitical Tensions on the Supply of Precious Metals

Geopolitical tensions among countries that produce these precious metals greatly influence their supply and price. Argentina, Bolivia, Chile, and Australia are among the leading producers of lithium, while the Democratic Republic of Congo is the top producer of cobalt.

The tensions between the United States and China, including the trade war they have been engaged in for several years now, have caused a significant impact on the supply of precious metals, particularly cobalt.

• In December 2019, the African nation announced that it would lift a ban on exporting cobalt from its copper and cobalt mines that account for over 50% of the world's total production.
• In 2020, the United States highlighted that one of its top priorities was to reduce dependence on China for certain metals such as lithium, cobalt, and rare earth metals.

These tensions cause instability in the global supply chain, which is concerning when it’s a critical part of manufacturing electric cars. China is the largest automotive market in the world, but the recent geopolitical tensions have raised questions about whether China can continue to supply lithium and other essential metals to meet global demand.

The Effect of Supply Chain Disruptions on Electric Vehicle Production and Prices

Due to the geopolitical tensions affecting the supply of precious metals, there is a real risk of a shortage. The limited supply in the market can cause substantial price increases in metals such as cobalt that are necessary for electric vehicle production.

• The price of cobalt has doubled in the last two years because of political unrest in the Democratic Republic of Congo, one of the world's largest cobalt producers. This price increase has a ripple effect on other industries that use the metal, including aviation and smartphones.
• According to Roskill, an independent market research company, amid the coronavirus pandemic and the resulting supply chain disruptions, electric vehicle production was slowed down primarily due to the decreasing supplies of battery materials, including nickel and cobalt.

Any disruption in the supply chain can cause delays in the production of electric cars, which can affect delivery schedules globally. Therefore, it can hinder the shift towards more sustainable transportation and slow down the progress towards meeting sustainability goals.

Key Takeaways:

• Electric vehicles contain several precious metals, such as lithium, cobalt, nickel, and manganese, which are necessary for their production and functionalities.
• Politics and geopolitical tensions can affect the supply and demand for these metals, causing disruptions in the global supply chain.
• This, in turn, can increase the price of metals like cobalt, slowing down the production of electric vehicles and affecting the overall progress towards meeting sustainability goals.

As geopolitical tensions continue to influence the supply and price of precious metals, the shift towards electric vehicles' production may take longer. Awareness of the importance of sustainable transportation has increased. Therefore, manufacturers must find new methods to balance their supply chain and reduce their dependence on a specific region or country. This allows them to have more control over prices and ensure that the progress towards zero-emission goals continues uninterrupted.