Analysis of the impact of automaker strategies on lithium price elasticity using a novel bottom-up demand model

A global transportation paradigm shift towards electrification is underway that is rapidly redefining how billions travel. To reduce possible disruptions to the electric vehicle transition, an understanding of the demand and supply of key critical materials, materials with a high risk of supply chain disruption, is essential. There are key gaps in understanding how automaker electrification strategies will influence materials demand over time. This presents materials suppliers with risks when making decisions on new mine openings, a process that can take many years before new ore is extracted. As a result, materials prices experience significant volatility such as with lithium, which has seen 6x price swings in the past five years. Informed by semi-structured interviews with major automakers, this research applies technical insights of current and emerging battery chemistries to bottom-up economic demand modelling to generate forecasts of lithium demand and price elasticity of that demand. Detailed analysis on automaker electrification strategies, regional breakdown, vehicle class composition, and selected battery chemistries creates an industry-wide evaluation of the possible short- and long-run impacts of high lithium prices. This research provides insights for decisionmakers in industry and government to optimize electrification strategies that minimize vulnerability to lithium price disruptions. I present three recommendations to automakers, suppliers, and policymakers: (1) accelerate investment in new battery technology, (2) adopt aggressive and flexible rollout strategies that offer wide options for range and drivetrain, and (3) improve strategic communication between suppliers and automakers to narrow forecasts on supply and demand.

Name thesis:degree_name

Master

Department dc:contributor.department

Massachusetts Institute of Technology. Department of Mechanical Engineering

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2024

Author dc:creator

• Sullivan, Luke Robert

Advisor dc:contributor.advisor

• Roth, Richard

Statement dc:rights

• In Copyright - Educational Use Permitted
• Copyright retained by author(s)

Licence dc:rights.uri

• https://rightsstatements.org/page/InC-EDU/1.0/

Handle dc:identifier.uri

https://hdl.handle.net/1721.1/155912

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/155912