In an article titled “Chinese graphite dominance threatens electric car ambitions”, posted on 14th March 2022, “Deutsche Welle” reports that Chinese graphite dominance threatens electric car ambitions worldwide. The author Ashutosh Pandey (Senior Business Editor for DW) states that China is a dominating force in the graphite supply chain, bearing in mind that the material is used in lithium-ion batteries, needed for the manufacturing of electric vehicles (EVs). Therefore, causing concern as to how that will affect the global market for EVs, given that world governments are pushing for reduction of carbon emissions. The claims Pandey makes turn out to be true.
China: The graphite powerhouse
The article contains a couple of claims, aimed at supporting the main idea of Chinese dominance on the market. We have also found pieces of information originating from a secondary source Fastmarkets’s articles, published in January 2022.
One of the first claims that were checked concerns the potential shortage in graphite supply. Through an additional source we have confirmed that transitioning to electric vehicles has made the demand for graphite very large, as it is a main element in lithium-ion batteries needed for electric vehicles.
We have also researched the cost of Chinese graphite, which depends on the mixture of both natural and synthetic graphite used in the anodes produces. Manufacturers favor synthetic graphite due to its higher purity and controlled specifications. It offers a longer lifespan and a faster charge turnaround. Synthetic graphite however, costs more and consumes more energy. As to natural graphite mining in China, it has been historically called out for environmental regulations and discharging dust pollutants. Based on this information we can conclude that if any factor (production cost; carbon dioxide emission reduction laws) were to disrupt the production chain, a global shortage of graphite will inevitably be felt worldwide.
All throughout the article makes multiple points, containing evidence for China’s leading position in graphite trade. We have chosen multiple other resources in support of that claim.
The chart in Image 1, sourced from Comtrade clearly showcases the difference in numbers between countries, providing proof for China’s leadership in the export of materials like graphite, needed for the manufacturing of car batteries.
Image 1. Screenshot of a chart, demonstrating China’s leading position in EV battery materials export in 2020
Having established that China is truly a leading force in graphite export, the focus will now shift to analyzing if this will threaten EV manufacturing worldwide. We have also found an additional research paper further establishing that by 2021 China was still the global leader in producing graphite with 79% of the total world output, according the US Geological Survey in January.
Taking a closer look at Europe’s market, we can confirm that effort is put into becoming a bigger producer. In the DW article, a claim is made that the number of EVs expected to be put in use by the next decade will rise, as part of a global zero carbon pledges. This information is based on a resource from BloombergsNEF’s. After conducted research, we have found multiple such pledges in existence (year 2030, 2040, 2050, 2060). The one mentioned in the DW article is from 2030 and it may be possible that it is based on a secondary source from BloombergNEF.
Europe’s efforts for going green
As we have made point of how China will affect the global market, we have decided to do additional research about the European market conditions for EVs. The original article mentions briefly that Europe is prompted to speed up the efforts to find a different source than China in order to shorten the supply chain. We have found proof supporting that claim. The European Commission has approved €2.9 billion in subsidies for EU members in order to stimulate European-based production of batteries for electric vehicles. With Europe currently accounting for only 3% of world battery cell production. The final goal being a lowered reliance on Asian materials.
When envisioning Europe’s future battery industry, further efforts are made to develop the European Battery Alliance, which launched in 2017 with the goal of making Europe a global leader in sustainable battery production and use. Another vital part of this alliance is the European Green Deal, which targets carbon emissions reduction by 2050.
Conclusion
We have established the claim that China dominates the global graphite market to be true. According to the evidence displayed, we are inclined to agree with the information included in the Deutsche Welle article. As for whether China poses a threat to electric car ambitions, we conclude that given the country’s big market share it is possible to affect the supply chain in a negative way, contributing to a shortfall of the material.
RESEARCH | ARTICLE © Simona Raykovska, Janet Atanasova, Kostadin Paskov, Borislav Davidkov, Sofia University, Bulgaria
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