In recent weeks the newswires have been active with stories about potential shortages of rare earth metals. The clue is perhaps in the name, though in fact rare earth metals are in relative abundance in the earth’s crust. There are 17 of these elements, the first of which was discovered in Sweden in 1787. Each of these rare earth elements has useful applications. Cerium, one of the most prevalent of the rare earth elements, is useful in self-cleaning ovens, as an oxidising agent, and as a yellow colouring in glass for example.
All of which could be classified as interesting but irrelevant as far as the automotive industry is concerned, were it not for the uses of some rare earth elements in batteries, magnets, and electronic systems. As with other materials, the distribution of supply and demand means that sometimes rare earth elements are a matter of potential strategic concern to companies and governments alike. In fact, such “critical materials” are increasingly being identified by governments as areas of concern with respect to future markets, trade and competition.
Hence the UK Department of Transport issued a report on the supply of Lanthanide in which there were concerns that the supply of this rare earth metal from China might be insufficient, especially if China were to restrict flows of the metal out of the country. Among other applications, Lanthanide (derived from Lanthanum) is used in NiMH battery packs. There is a danger that demand for this metal, along with Neodymium and Dysprosium, could outstrip supply in the short term. This would result in consequent upward pressure on prices if endeavours to release more supplies or find alternatives are not forthcoming.
China has some vested interest in retaining supplies for the burgeoning electric vehicle industry within the country
This is of course unwelcome news to the OEMs and suppliers that are counting on deep year on year cost cuts to accelerate electric vehicle uptake around the world. China has some vested interest in retaining supplies for the burgeoning electric vehicle industry within the country, and is currently the major supply source. As is often the case, it is not a matter of the absolute supply of rare earths, but rather the location of the major production facilities.
These convulsions are a manifestation of the many ways in which the global automotive industry is re-orientating its use of technology and materials. Precisely because the industry is so big, it has a profound impact on the demand for many virgin materials on a global basis.
Supply security concerns act to slow down the technology diffusion process, and serve to remind that every “technofix” comes with a new set of problems and issues to resolve
For the OEMs, the transition to electric vehicles must of course include a consideration of the security of supply for new materials and components, raising new uncertainties and risks alongside technology development and market deployment issues. Supply security concerns act to slow down the technology diffusion process, and serve to remind that every “technofix” comes with a new set of problems and issues to resolve.
Fortunately, governments and companies are getting more adept at seeing the problem coming, and precisely because of alarms of this nature being raised it is possible that remedial action will solve the impending crisis. For now, it is a “scare”…but inaction would potentially be very damaging to the growth of the nascent electric vehicle sector.
Dr Peter Wells is a Reader at Cardiff Business School, where he is a Co-Director of the Centre for Automotive Industry Research and leads the automotive industry research programme within BRASS, also in Cardiff University. Dr Wells is also a director of AutomotiveWorld.com’s sister website AWPresenter.com. He can be contacted on wellspe@cardiff.ac.uk.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
