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Scoping Raw Material Dynamics In Future Mobility


Every government and automotive player knows that the mobility environment will transform. But the one who positions itself in the national and international supply chain ecosystem quickly will reap a good harvest

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The automobile industry utilizes approximately 12% of Steel, 15% of Iron, 16% of Aluminum, 8%-14% of copper, 4% of Nickel, 40% of Cobalt, 35% of Lithium, 8% of Graphite and 10-15% of Rare Earth Elements, produced globally. Comparing and contrasting these percentages with the global material resource distribution will enable us to look at the macroeconomic picture of the raw material environment as a whole. Every government and automotive player knows that the mobility environment will transform. But the one who positions itself in the national and international supply chain ecosystem quickly will reap a good harvest.

What Will Really Change?

The automotive industry has been running on a similar business model for the past 80-85 years. The roles of a raw material supplier, a component manufacturer and an original equipment manufacturer with respect to their positions in the value chain have not seen too many changes in this time. But with the advent of electric mobility, things have changed; the whole value proposition is now being re-looked at.

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Value distribution in an Internal Combustion Engine vehicle

Value distribution in today’s internal combustion engine vehicle as compared with battery electric vehicle of future is very different. The position of raw material supplier is going to become stronger in the value chain due to a decrease in the usage of conventional materials and the inclusion of many other materials.

Value distribution in a Battery Electric Vehicle

The component manufacturers are expected to divide themselves into two categories: one who upgrades their offerings in accordance with new mobility requirements and others who become solution providers such as infrastructure developers and shared mobility conveners. The original equipment manufacturers are expected to see a decline in their position in the value chain as component and material suppliers gain traction. The OEM will have a choice to shift from its basic purpose of body & assembly and include battery & motor manufacturing in its scheme of operations to attain a better position. 

New Mobility, New Materials

The major raw materials used in vehicles today are various alloys of steel, iron, aluminum, copper, plastics and precious metals. But in electric vehicles (EVs), the usage of conventional metals will see a decline and materials used in battery and BMS will witness a rise.

Breakdown of Raw material value in an Internal Combustion Engine Vehicle

When the ICE material value is contrasted with BEV material value, a lot of differences can be seen. The usage of steel and its alloys will decrease and will be replaced by lighter materials such as aluminum and plastics. Use of copper and aluminum in vehicle component and chassis is expected to increase due to the replacement of mechanical components with electrical & electronics components.

Breakdown of raw material value in Battery Electric Vehicle

A major share of raw material value will be devoted to battery materials that include nickel, cobalt, lithium, graphite and rare earth elements. A huge difference will be seen in the way materials are being imported, exported, stacked and utilized.

Rethinking The Macro Scenario

Comparing the geographical distribution of major conventional raw materials including steel, Iron and plastics with the new set of focus materials including aluminum, copper, lithium, nickel, cobalt, graphite and rare earth elements, the ratio of value distribution between the conventional and new materials is 66%:44% or 3:2. With more advancement, this ratio is likely to become equal by 2040. Manufacturers and governments will have a keen eye on the areas that are evolving as major raw material hubs for the new material segment.

Material distribution VS Area Distribution in Percentage

The global production of steel in 2016 was around 1475 million tons out of which 71% of it was produced in Asia. Iron produced in the same year totaled to about 2228 million tons out of which 38% was produced by Australia. The production of Aluminum globally accounted for about 54.41 million tons in 2016 out of which Asia’s share was about 63%. Copper production, on the other hand, is dominated by South American countries with a share of 8.3 million tons out of the total 18.62 million tons. Nickel’s production reached to 2.4 million tons and graphite’s production reached to 1.18 million tons in 2016. For both the elements, Asian countries dominated the world production with 31% and a whopping 83% respectively. South African countries produced about 82.1 thousand tons of cobalt out of 127 thousand tons in 2016, attaining a 65% global production tag. Lithium production reached to 39.1 thousand tons in the same year with South American countries, especially the “Lithium triangle”, producing about 45% of the entire lot. Rare earth elements production is dominated by Asian countries, majorly China, accounting of 75% global production share with 108.1 thousand tons out of the total of 145.1 thousand tons.

Understanding the intrinsic availability of materials globally and calculating the requirement of these materials in future cars will enable manufacturers to strategically align themselves with the change in mobility. The industry is on the verge of disruption with new business models. Electrification, digitization, autonomous driving and mobility as a service are the trends that will create new avenues for competition & cooperation in the micro as well as the macroeconomic arena. Tomorrow’s mobility ecosystem comprising of hybrid and electric fleets will require a new prospectus of materials to make everything from batteries to simplified powertrains and customizable interiors. The future of mobility will hence open new gates for raw material suppliers and component manufacturers.

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