Climate change could slow the growth rate of the electric car industry

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Automakers rushing to make more electric vehicles have a problem: Climate change is catching up with the industry.

On Monday, authorities in China’s Sichuan province – the source of about a fifth of the country’s lithium output – extended power cuts to some industrial users amid the most intense heatwave in more than 60 years. years depletes the reservoirs used for hydroelectricity.

Volkswagen said last week that its plant in the region was affected by the power shortage and that it expected a slight delay in deliveries to customers. Toyota and battery maker CATL have temporarily closed factories.

Tesla and China’s SAIC Motor have told authorities in Shanghai – about 2,000 kilometers east of Sichuan’s capital Chengdu – they may have difficulty maintaining production if the electricity crisis continues to unfold. assign suppliers.

In Europe, a drought has threatened to render the Rhine – a crucial waterway for German, Dutch and Swiss trade for centuries – impassable at a key crossing point. While rains over the weekend eased the risk of disruption to diesel and coal shipments to power stations and industrial plants, Shell has already cut production at Germany’s largest oil processing complex due to this issue.

And in the German states of Brandenburg and Saxony, where Tesla and BMW operate car factories, authorities have had to ask the military for help battling several wildfires this summer.

Many automakers view climate change as a business risk factor. Tesla, for example, says that if weather-related disasters occur, its headquarters and production facilities “could be severely damaged, or we may have to stop or delay production and shipment of our products.”

Although manufacturers clearly realize that climate change can affect their production networks, their actions do not always match the severity of the threats. Companies continue to locate water-hungry manufacturing sites in areas where supplies are becoming increasingly scarce.

Tesla faced opposition in Germany when building its factory in a region facing falling groundwater levels and prolonged droughts. Fremont, Calif., where Tesla has been producing electric cars for more than a decade, gets about 400 millimeters of rain a year, less than half the U.S. average.

The Tesla battery plant works with Panasonic in Reno, Nevada, and the Lucid Motors plant south of Phoenix, Arizona is located in even drier regions.

Lucid, which is part-owned by Saudi Arabia’s sovereign wealth fund, plans to build an electric vehicle factory in the kingdom near the city of Jeddah, where temperatures can exceed 49C in summer.

Several automakers, including Tesla, are equipping their factories with renewable energy generators and say they are working to make their sites more resource-efficient, including reducing water consumption.

At its plant in Chennai, India, BMW collects rainwater in ponds during the monsoon season, covering 60-90% of the plant’s annual water needs. To further increase this share, other stormwater retention tanks are being built, a BMW representative said.

While the rise in demand for electric vehicles is poised to reduce carbon emissions from transportation, it has sparked a mining boom for battery metals, including lithium. The silvery-white metal usually comes from surface mines in Australia or South America, where there are concerns about waste water and toxic materials released from massive evaporation ponds.

The raw materials are then sent to Asia for processing. By the time lithium ends up in European or American electric vehicles, a lot of CO2 has been released into the atmosphere. Efforts are underway to extract lithium without emitting greenhouse gases, but these are still in their infancy.

Volkswagen has set up a factory in Germany to eventually reuse 90% of the battery components. He was also an early backer of QuantumScape, the US-listed company working on solid-state batteries, a potential alternative to widely used lithium-ion technology.

The automaker is expected to sign a deal with Canada to secure access to raw materials, including nickel, cobalt and lithium, for the production of vehicles and batteries as part of Chancellor Olaf Scholz’s visit to the country this week.

VW said low water levels in the Rhine had not affected its production and its crisis management team had proven itself during extreme weather events and challenges such as the blockage of the Suez Canal and the war in Ukraine.

The company also implemented a supplier management system to quickly detect signs of disruptions and work with parts manufacturers to defuse them.

Updated: August 23, 2022, 3:30 a.m.

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