Raw materials for electromobility

Battery-electric mobility, a key technology for achieving climate protection goals in the transport sector, uses materials that have previously only been used to a limited extent or not at all in the automotive industry. The most important components of electric cars and other electric vehicles are the traction battery and the electric traction motor. Raw materials such as lithium, cobalt, nickel, manganese and graphite are required to produce batteries. These are new raw materials in the automotive value chain. In addition to copper, rare earths such as neodymium, praseodymium and dysprosium are used in the permanent magnets for the electric motor.

The increasing demand for these predominantly metallic raw materials could lead to bottlenecks along the value chain, at least temporarily. In addition, if demand increases and supply remains the same, a price increase can be expected. Therefore, for the success of Germany as a mobility location, reliable and price-stable availability of these raw materials is necessary. Electric cars are creating significant demand pressure on these raw material markets.

Many countries around the world also see the supply of critical raw materials as a security risk. The Russian war of aggression against Ukraine made it clear to the European Union that we should not be too dependent on a single supplier country when it comes to the supply of energy raw materials. These dependencies can be even more drastic when importing strategic raw materials. The Democratic Republic of Congo has a global market share of over 60 percent when it comes to cobalt supply. China has a global market share of around 80 percent for rare earths. Companies' efforts to diversify their supply chains for strategic raw materials are becoming increasingly difficult. Countries are increasingly introducing protectionist measures and restricting or even banning the export of strategic raw materials, such as Indonesia for nickel or China for germanium and gallium.

The VDA sees an immediate need for political action here to ensure the competitiveness of European industry and to achieve climate protection goals. Specifically, it involves the following measures:

Lithium is a strategic raw material for the automotive industry. No electric car can currently do without lithium. Lithium therefore plays a crucial role in the comprehensive electrification of vehicles and is an essential part of the transformation in the transport sector. The extraction of lithium can bring both opportunities and challenges in the mining areas. It can create jobs, generate tax revenue and promote the development of processing industries. At the same time, however, social and environmental impacts can also occur that can negatively impact the lives of the people affected and violate their human rights.

In view of these facts, companies in the German automotive industry and other members of the automotive industry dialogue are actively committed to ensuring that preventative and remedial measures are taken. This is about protecting and respecting human rights in connection with lithium mining. The members of the industry dialogue have published cross-border recommendations for quality and action concerning responsible lithium mining. These groundbreaking recommendations were developed as part of the industry dialogue “Respect for human rights along global supply and value chains in the German automotive industry” in close cooperation between representatives from companies, business associations, non-governmental organizations and politics.

The development of these recommendations for quality and action follows a risk-based approach upon a comprehensive analysis of the human rights risks associated with lithium mining. Taking international standards into account and in close coordination with external stakeholders, common expectations for responsible lithium mining were formulated. These recommendations for action offer German automotive companies opportunities to promote compliance with the quality standards of lithium mining companies and to support them in doing so.

After jointly developing the recommendations for action, the VDA is convinced that the published recommendations for quality and action represent an important step towards more responsible and sustainable lithium mining and will thus help to reconcile the social and ecological dimensions of this important raw material.