RISING demand from electric vehicles (EVs) and challenges in securing raw materials will deliver a battery supply crunch for automakers already grappling with a chip crisis, according to a key Chinese manufacturer.

“When the chip shortage is over, the major supply shortage the industry faces would be batteries,” said Yang Hongxin, chairman of SVolt Energy Technology Co. “The production capacity of battery cells will be tight in the next few years because expansion takes time.”

Global automakers are rapidly adding electric models as battery prices plunge and as governments set deadlines to phase out sales of new combustion-engine cars to help meet climate targets.

Demand for lithium-ion batteries from transport and energy storage will surge to as much as 5.9 terawatt-hours a year in 2030, putting a strain on supply chains, BloombergNEF said in an annual New Energy Outlook report last week.

Availability of sufficient lithium products, copper foil and some cathode materials could become a constraint on the battery sector’s efforts to keep pace with demand, according to Yang.

Current high raw material prices may not ease until the second half of next year and “the price pressure will have to be shared along the supply chain,” he said.

“Batteries could be the next EV component facing a potential shortage,” said Dennis Ip, a Hong Kong-based analyst at Daiwa Capital Markets. Lithium materials could be in deficit for the next 2 to 3 years, a factor that would potentially add to the cost of an electric vehicle, he said.

Changzhou-based SVolt, a spinoff of carmaker Great Wall Motor Co., is seeking to add further exposure to lithium production, and is examining potential targets including mines and salt lake operations in China, Yang said. (SD-Agencies)