Powering the future: electric vehicles

Electric vehicles will transform not only energy usage, but supply chains, industries and physical infrastructure across the world.

Significant commercial opportunities exist across the whole electric vehicle (EV) battery lifecycle - from the sourcing of raw materials and manufacturing, to their installation in EVs, recharging and eventual recycling. In every part of this lifecycle, the legal developments have a material impact on the nature, location and size of these commercial opportunities.

This report, produced with our global alliance partner Linklaters, contains an overview of the commercial opportunities emerging in the EV battery lifecycle, as well as the legal developments in Australia, the EU, US and China that will unlock them. The Appendix to this report provides more detail on the legal developments that will drive the EV battery value chain.

The EV battery lifecycle

Key insights on commercial opportunities and legal developments across every stage of the lifecycle

Stage 1: Sourcing raw materials

Commercial opportunities

  • A significant amount – potentially up to US$30-45bn – may need to be invested in mining capacity by 2025 to help satisfy demand for EVs.
  • Mix of metals demanded will also depend on the types of batteries produced in future (e.g. the development and take-up of solid state solutions).
  • The prices of key metals used to create EV batteries (lithium, nickel and cobalt) have been highly volatile.
  • There is potential for a significant shortfall between mining capacity and the demand for EV batteries.
  • Price volatility along with market uncertainty have been challenges for investors.

Legal / regulatory developments by region

EU: Responsible sourcing is required from 2021 for conflict minerals. The European Commission is developing a common set of principles for a socially and environmentally sustainable mining sector in Europe and will map the availability of raw materials within the EU. It is also exploring sustainable mining benchmarks.

China: No relevant provisions.

US: Few specific regulations pertaining to sourcing of raw materials for battery production; certain disclosure requirements.

Stage 2: Battery Manufacturing

Commercial opportunities

  • China already accounts for >60% of the world’s battery plant capacity. Relatively concentrated industry.
  • European Battery Alliance established by European Commission in Oct 2017 to facilitate access to funding to develop new battery manufacturing capacity in Europe. Potential for M&A and joint ventures.

Legal / regulatory developments by region

AU: Changes to antitrust law due to commence September 2019 mean that patent licensing arrangements will no longer be exempt from scrutiny.

EU: The Strategic Action Plan aims to support a sustainable EU battery cell manufacturing base with the lowest environmental footprint possible.

China: Foreign investment restrictions on EV battery manufacturing lifted in September 2017.

US: Adopted safety-related amendments to existing standards for batteries for electric vehicles.

Stage 3: Incorporation into, and sale of, EVs

Commercial opportunities

  • EV sales will overtake traditional vehicle sales by 2033, assuming:
    • the price of EVs continues to fall;
    • charging infrastructure increases significantly; and
    • the mileage range of EVs increases.
  • Government subsidies, incentives and new regulations will drive manufacturers to increase EV sales as a percentage of their total, particularly in the EU.

Legal / regulatory developments by region

AU: Euro 5 reducing emissions standards.

EU: Proposed regulation requiring CO2 emissions from new cars to fall 37.5% over 2021-2030. Varying EV subsidy levels across EU.

Big push to improve air quality. Ban on new internal combustion engine vehicles in many cities falling between 2030 – 2040.

China: EV subsidies scheduled to end in 2020. However, “China VI” emissions standards (seen as building on comparable European and US requirements) to be implemented in 2023.

US: Up to $7,500 federal tax credit per EV under threat of elimination in 2020 budget.

Stage 4: Recharging of EVs

Commercial opportunities

  • US$80bn investment potentially required to develop ultra-fast EV infrastructure globally by 2025.
  • The length of time required to charge an EV battery will change consumers habits on refuelling and could provide opportunities for new market entrants including those offering services during charging.

Legal / regulatory developments by region

EU: EU Directive 2014/94 requires Member States to set targets for public recharging points which would allow EVs to operate in urban and suburban areas by end of 2020 (potential extension to 2025).

China: Guidance anticipates 4.3 million private charging points and 500k public charging points by 2020.

US: No federal incentives for installation of EV charging systems (state level incentives vary by state). Approximately 25,000 charging stations and 60,000 plugs so far.

Stage 5: Battery recycling

Commercial opportunities

  • The significant power storage capacity of batteries will result in a secondary market worth over US$30bn by 2030.
  • After their in-car life, EV batteries will still have substantial power storage capacity.
  • Alternate uses include recycling for raw materials or reuse in other contexts.

Legal / regulatory developments by region

AU: No overarching framework regulating the end of life of lithium-Ion batteries, but various environmental and OH&S measures do apply to their storage, transfer, transport and recycling.

EU: Policy initiatives on battery recovery, reuse and recycling anticipated by Autumn 2019. Batteries Directive to be revised to take EV batteries into account.

China: Measures introduced in 2018 require automobile manufacturers to establish battery recycling channels and recycling service outlets.

US: Recent federal proposal to facilitate re-use of EV batteries.