In This Issue
Summer Bridge on Critical Materials
June 15, 2024 Volume 54 Issue 2
The summer issue of The Bridge discusses leveraging new and emerging technologies, infrastructure, innovative approaches, and a resilient supply chain to ensure a stable and reliable supply of critical materials far into the future.

An Automotive View of Critical and Sustainable Materials

Wednesday, June 12, 2024

Author: Paul E. Krajewski

A successful transition of the automobile industry to an electric, autonomous, and connected future depends on a stable and scalable supply of critical and sustainable materials.

Automobiles are manufactured from materials using almost every element in the periodic table, from aluminum to zinc. A consistent supply of these materials is essential for avoiding interruptions in production. The importance of a consistent supply has been known since the early days of the automotive industry. Henry Ford was very concerned about a stable supply chain and secured iron ore from Michigan and rubber from Brazil, as well as other materials critical to his vehicles.[1] The automobile industry today is much different than it was in the early 1900s, when companies were mostly vertically integrated, controlling raw materials and the production of most components and subsystems used on the vehicle. Today, most components are manufactured by suppliers and provided to automakers for assembly. As a result, materials are provided and utilized by a complex, global supply chain.

The complexity of the automotive supply chain and the resulting impact on material supply and cost have been exposed by a series of events over the past twenty years. China controls most of the magnesium production in the world (USGS 2022). As an example, prior to the 2008 Beijing Olympics, Chinese authorities ordered a halt in magnesium production, as well as steel, cement and glass production, as part of an effort to improve air quality. The result was a significant shortage of magnesium and a spike in prices (Imahashi 2021). Production was slowed again in 2021 due to energy supply issues, further contributing to uncertainty in magnesium availability and pricing (Index Box, Inc. 2021). In 2011, the Tohoku earthquake and tsunami led to shortages in electronic components and even pigments for some paints (Bunkley 2011). The 2020 COVID-19 pandemic and resulting semi-conductor chip shortage limited automobile production and even the features available on some vehicles. These events have led to detailed analyses of the automotive supply chain by automakers, including where materials are sourced, converted, and finally integrated into vehicles.

Krajewski figure 1.gifIn addition to better understanding the supply chain, there is a growing desire to ensure the materials and processes used to make sure automobiles are sustainable and have a low carbon footprint. These constraints are driving new considerations and complexities in the ­material supply chain. This article will focus on the issues impacting how materials are viewed as critical and sustainable by focusing on two key parts of the supply chain: raw material production and conversion. ­Examples of ­critical ­materials as they apply to electric vehicles will be ­presented, culminating in a path forward emphasizing the importance of public-private partnerships to enable the availability of critical materials.

Critical Materials

The “criticality” of materials to automobiles fundamentally depends on their importance to various ­vehicle systems, like batteries, electric motors, sensors, or other subsystems, and how risky the supply of these ­materials is. The definition presented by the US ­National ­Science and Technology Council, Subcommittee on Critical and ­Strategic Mineral Supply Chains (NSTC 2016) is, “‘­Critical minerals’ are those that have a supply chain that is vulnerable to disruption, and that serve an essential function in the manufacture of a product, the absence of which would cause significant economic or security consequence.” Included in this classification are how easily other materials could be substituted, where in the world they are located, and whether there are multiple suppliers who could provide the material. Similarly, the Energy Act of 2020[2] defines a “critical material” as any non-fuel ­mineral, element, substance, or material that the ­Secretary of Energy determines: (i) has a high risk of ­supply chain disruption; and (ii) serves an essential function in one or more energy technologies, including technologies that produce, transmit, store, and conserve energy.

Recent trends in the automobile industry such as electrification, autonomous and advanced driver assistance systems, connected vehicles, and large displays have led to a change in the types of materials that are critical to the manufacturing of these vehicles. The chart shown in figure 1 is used by the US Department of Energy to designate critical materials (DOE 2023). It compares the importance of the material to future energy as a function of supply chain risk. This chart aligns well with the perspective of the automobile industry, highlighting materials critical to battery manufacturing (lithium, cobalt), electric motors (rare earth metals), and even sensors (gallium) and displays (tellurium). In addition, materials such as magnesium, which are important for vehicle light weighting but are largely controlled by China, are also represented. The chart shown in figure 1 is for the time period through 2025, but there are longer-term graphs available that capture projected future trends.

Sustainability

Automotive descriptions of sustainability cover a wide variety of issues, including safety, CO2 emissions, programs for a sustainable workforce, community viability, and fair-trade practices, among others. An illustration of the issues impacting sustainability is summarized in figure 2, which is reproduced from the GM sustainability report in 2022 (GM 2022). There are several issues in figure 2 (GHG emissions, circular economy, supply chain environmental impacts, supply chain labor conditions, waste, and water management) relating either directly or indirectly to materials used in vehicles. Additionally, there are goals for renewable energy usage, the amount of sustainable content in vehicles, and even the packaging used for materials and components in the vehicle build process. Many of these issues directly overlap with the considerations for critical materials.

Raw Materials

Most materials used in the automobile industry are found in nature in a different form. Raw materials could reside as complex minerals or oxides from which metals are extracted, or as petrochemicals used to create polymeric materials. As a result, the location of where these materials are found and the process used to extract them are often the biggest factors driving their designation as “critical.” For example, 83% of rare earth reserves are in China (34%), Vietnam (17%), Brazil (16%), and Russia (16%) (Statista Research Department 2024). Seventy percent of the cobalt in the world is mined in the Congo (Gulley 2022). As previously mentioned, China controls most of the global magnesium supply. Alternative sources of magnesium from other countries, such as Russia, the United States, and Israel, are available, albeit at lower volumes. However, the lower cost of magnesium from China comes with a significant environmental impact as a result of their production methods (Pidgeon process). The same can be said regarding the production of critical materials in China as well as in other countries engaged in extraction and refinement. Thus, sustainable extraction and refinement of critical materials must be considered when sourcing materials. The regional dominance of raw material supply inherently drives risk and makes material availability subject to geopolitical issues.

Krajewski figure 2.gifThe way these raw materials are extracted, the energy required, and the labor force used are some of the factors driving “sustainability.” Leveraging renewable energy sources in highly efficient processes is ideal. Minimizing the amount of land and water used in the process is particularly important for the local communities. The byproducts generated by the processes and the resultant waste stream impact on the environment need to be understood. Critical throughout all these steps is an understanding of the miner’s performance in terms of human rights, labor rights, safety, protection of biological diversity, and additional factors. Numerous organizations have been established to monitor these examples. The Global Platform for Sustainable Natural Rubber (GPSNR)[3] was created to address issues of ­sustainability, fair trade, and human rights efforts in the rubber ­industry. The First Movers Coalition[4] was established to help companies leverage their purchasing power to create early markets for innovative clean technologies in sectors like aluminum and steel production.

Conversion

Material conversion contributes significantly to classifying materials as critical or sustainable. The conversion process can take many forms: converting ore or minerals to usable metals or alloys; processing petrochemicals to produce polymeric materials; converting metal ingots to usable forms like sheet or extrusions; producing alloy ingots for castings; or creating textiles for fabrics and carpets, pigments for paints, or liquid crystals for displays. One of the biggest drivers affecting these conversion processes is the geographic location where they are performed. This was highlighted in the 2023 Critical Minerals Market Review (IEA 2023), which showed how the conversion of raw critical materials is dominated by China. A chart from the study is shown in figure 3. Taking a material like cobalt as an example, 70% of global production comes from the Congo, while almost 65% of the conversion occurs in China. This means the material not only has to travel through two different geopolitical regions, but it also must be shipped around the world if it is to be used in the United States. This not only creates risk but also adds logistics costs to the materials, which is why it is deemed a “critical material.”

Critical Materials for Electrification

The main reason the materials and supply chain are receiving such scrutiny is the significant transformation occurring in the global automobile industry. There is an accelerating shift from the internal combustion engine to electric vehicles powered by batteries, hydrogen, or hybrid systems. These new propulsion systems have vastly different material requirements than gasoline-powered engines. Ensuring that electric vehicles are cost-­competitive requires a secure, scalable, and sustainable supply of these materials. Three examples critical to the success of electric vehicles—batteries, electric motors, and power invertors—are discussed below.

Krajewski figure 3.gifFor batteries, critical materials include lithium, nickel, cobalt, manganese, silicon, and graphite. These materials are required for key battery components such as anodes, cathodes, separators, and electrolytes. There are five important steps in the supply chain to understand and secure: 1) Raw material mining or retrieval, 2) Conversion of raw materials to key compounds, 3) Synthesis of active battery cell materials, 4) Converting materials into cathode and anode powders, and 5) Assembling the components into a cell and pack. Automakers have engaged in strategic collaborations across the value chain. GM, for example, has announced that the materials required to produce 1 million vehicles of annual production beginning in 2024 were secured in 2022. In addition, the dependence on certain critical materials like cobalt has led to significant R&D to enable alternatives. As a result, the future batteries could potentially use up to 70% less cobalt than previous generations (Chevrolet 2022). As an alternative, LiFePO4 batteries are proving effective ­battery technology and a push toward less dependence on cobalt materials systems.

For electric motors and drive units, rare earth elements, including neodymium, praseodymium, terbium, and dysprosium, are critical to their production. These elements are essential to the high-powered magnets that are critical to converting electricity into mechanical power. The key aspects of the supply chain for electric motors include raw material extraction, conversion of the raw material to metals and alloys, creation of magnetic materials, assembling the magnetics into a motor, and assembly of the drive unit. Automakers are collaborating with materials suppliers to both secure the existing supply of rare earth elements and explore a new supply of rare earth materials (GM 2021).

Finally, power inverters are essential for electric vehicles. Inverters convert the voltage from the vehicle’s battery to an alternating current (AC), which is usable by the subsystems on a vehicle. An example is the drive motor, which leverages AC to achieve smooth control during acceleration. It is also important during regenerative braking, when the AC produced by the braking motors is converted to direct current output to recharge the battery. The key material for future inverters is silicon carbide (SiC), which enables greater efficiency and operation over a wider range of operating temperatures. The value chain for inverters involves melting SiC to form an ingot, wafer fabrication, the creation of a bare die, packing the die into the power module, and then assembling the inverter. SiC is on the critical materials list due to challenges in manufacturing output and energy requirements that can lead to supply backlogs and disruption.

A Path Forward

Having a secure supply of the materials that are necessary to produce a vehicle means developing a long-term strategy and partnerships to ensure that materials will be available, with limited impact on global politics, climate disasters, or other disruptions. In addition, automobile production is considered a low-margin business, necessitating a continuing push to reduce costs. Reducing the logistics cost to transport materials from mining to conversion to vehicle assembly is critical.

Original equipment manufacturers have started collaborating with companies across the materials value chain to enable a secure supply. Creating the right partnerships requires a deep understanding of the whole value chain. This is especially true for materials essential to electrification.

The strategy to enable a stable supply of sustainable materials for future automobiles has four key pillars: secure, scalable, cost-effective, and sustainable, including more environmentally conscious extraction and refining of materials. This requires the private sector to work with federal and local governments to stimulate and enable success. A few examples of collaboration opportunities include:

  • Incentives for production of critical materials and subsystems, ensuring consistency, speed, and transparency in compliance and permitting processes.
  • Developing downstream and midstream assets both in the United States and Canada.
  • R&D funding at both national labs and universities in collaboration with industry to drive mining innovation, the discovery of new materials and processes, the recycling of technologies, and the creation of sustainable solutions.
  • Market access—facilitating the availability and affordability of critical minerals from asset-rich allies, such as Australia (lithium, nickel, cobalt, rare earths) and Canada (nickel, cobalt).
  • Recycling and reuse—creating an electric vehicle ­battery recycling market at scale to secure critical mineral sources, support manufacturing and jobs, and promote energy security.
  • Workforce development—measures to develop a domestic workforce with the necessary skills to support the growth and competitiveness of electric vehicle supply chains and manufacturing.

Summary

A successful transition of the automobile industry to an electric, autonomous, and connected future depends on a stable and scalable supply of critical and sustainable materials. Significant technical and business progress has been made to develop new technologies and partnerships to enable that future. A long-term vision and commitment to the transition is critical in both the private and public sectors for the transformation.

Acknowledgements

Helpful discussions with many General Motors ­employees are acknowledged and appreciated, especially Michael Maten, Janet Robincheck, Mark Bauer, and Tanya Skilton. Additional support from Catherine McGee and Laura Nielsen is appreciated.

References

Bunkley N. 2011. Piecing together a supply chain. The New York Times, May 12.

Chevrolet. 2022. (R)evolutionary tech. New Roads Magazine, Nov 21. Online at www.chevrolet.com/new-roads/electric/revolutionary-tech.

DOE (US Department of Energy). 2023. Critical Materials Assessment. Washington, DC.

GM (General Motors). 2021. General motors and MP ­materials enter long-term supply agreement to scale rare earth magnet sourcing and production in the U.S., Dec 9. Online at https://mpmaterials.com/articles/general-motors-and-mp- materials-enter-long-term-supply-agreement-to-scale-rare- earth-magnet-sourcing-and-production-in-the-us/.

GM. 2022. 2022 Sustainability Report. Detroit, Michigan.

Gulley AL. 2022. One hundred years of cobalt production in the Democratic Republic of the Congo. Resources Policy 79:1–10.

IEA (International Energy Agency). 2023. Critical Minerals Market Review 2023. Paris.

Imahashi R. 2021. Manufacturers rue dependence on China for supplies of magnesium. Nikkei Asia, Nov 15.

Index Box, Inc. 2021. China’s magnesium shortage threatens the European auto industry. GlobeNewswire, Nov 3.

NSTC (US National Science and Technology Council), Subcommittee on Critical and Strategic Mineral Supply Chains. 2016. Assessment of Critical Minerals: Screening ­Methodology and Initial Application. Washington, DC.

Statista Research Department. 2024. Reserves of rare earths worldwide as of 2023, by country, Feb 6.

USGS (U.S. Geological Survey). 2022. Mineral Commodity Summaries 2022. Washington, DC. Online at https://doi.org/10.3133/mcs2022.

 


[1]  For information on Henry Ford, see www.thehenryford.org/visit/ford-rouge-­factory-tour/ history-and-timeline/fords-rouge/ and www.thehenryford.org/­collections-and-research/digital- resources/popular-topics/brazilian-rubber-plantations/ .

[2]  See www.energy.gov/cmm/what-are-critical-materials-and-critical- minerals.

[3]  https://sustainablenaturalrubber.org/

[4]  https://initiatives.weforum.org/first-movers-coalition/ home

About the Author:Paul E. Krajewski (NAE), director, GM Research and Development.