2035 – It’s a date that has been bandied about by automotive manufacturers as the goal date to end production of internal combustion vehicles (ICEs) and turn their manufacturing attention to full production of EVs. But is this goal something that is achievable, considering the numerous challenges emerging within the EV marketplace – including infrastructure challenges for EV battery charging, limited rare earth materials needed for EV batteries, and the concerns of cash-strapped consumers – and what does this mean to the automotive recycling space?
Dr. Nadim Maluf, Qnovo’s chief executive officer and former Stanford consulting professor, works with all car manufacturers and legacy car makers who are making the transition to electric vehicles. According to Maluf, Qnovo is seeing an acceleration in EV adoption. In many countries around the globe, it is crossing the critical five percent threshold that signals wider adoption. It does not mean that there aren’t challenges. Affordability, range anxiety, charging availability and reliability remain important for adoption.
“Supply chain and raw materials are not yet a limitation to growth – perhaps in 2028 or 2030, but not today,” Maluf said. “All expectations are that there will be an oversupply of battery manufacturing in the next couple of years.”
According to Maluf, most forecasts indicate that by 2040 to 2050, all vehicles sold will be EVs. “Between now and then, there is a ramp up curve. Sometimes it slows down and at other times it accelerates,” Maluf said. “While more governments have established policies to forbid the sale of ICEs by 2035, ICEs will continue to be a feature on the road. They won’t disappear just yet, but the ICE market is on a slow decline that will take a generation to entirely end. I think the sector is too hung up on 2035 as a date, as opposed to ‘the EV train has left the station.’ Does it really matter whether the date is 2035, or 2036 or 2037? Rather, it is a race. OEMs that figure out scaling sooner and become profitable sooner will be the winners – Tesla is a good example. Those OEMs that can’t figure it out as the clock ticks will not be around in the coming decade.”
According to Benoit Leblanc, deputy chief executive officer of TRIGO Group, a global provider of operational quality management and consulting solutions, mainly for the automotive, emobility, aerospace and heavy transportation industries, said experts predict that EVs and battery demand will grow by more than 25 percent per year over the next 5 years and potentially longer. The growth is driven by both demand and car production, both strongly pushed by most governments in various ways.
“From a carbon emission point of view, EVs are a no brainer. McKinsey now estimates the total life cycle of an EV emits 50 to 80 percent less carbon than an ICE vehicle, depending on how green the electricity is produced locally,” Leblanc said. “So the question is not if the EV marketplace will significantly grow – we are certain it will – but how fast.”
Leblanc said this should mainly depend on two things: how the charging infrastructure will ramp up and how manufacturers will overcome the upcoming raw material limitations, especially lithium, which could put future battery production at risk.
“Today, especially in Europe and North America, the gap in charging infrastructure still feeds people’s ‘range anxiety,’ which slows down the demand shift towards EV, especially in lower density areas where fast charging points are scarce,” Leblanc said. “I believe that an intensified government push is needed in the short term to turbo-charge infrastructure building. It will then create an attractive environment for a dynamic private charging point ecosystem to emerge and be sustained over the longer term. Such a leap has not happened yet but my colleagues at TRIGO and I are confident it will.”
Leblanc further pointed out that according to a 2022 report from the Boston Consulting Group, today’s lithium supply is 40 percent short of what demand should be in 3 years. Mining and refining capacity building will be the main bottleneck, with huge investments needed.
“This may create temporary supply constraints. Main car OEMs are working to mitigate such risks by integrating some of the battery production,” Leblanc said.
Potential Impact on ICE Marketplace & Auto Recycling
Kevin Fitzpatrick, senior vice president of North America Operations for Opus IVS, an automotive tech-focused collision repair solutions company, said that EVs account for approximately 14 percent of total U.S. vehicle sales, the problem however, is that manufacturers were driving for much more.
“As an example, Ford has approximately 117 days’ worth of stock on dealer lots. This is a huge expense to carry for their dealers. Output from manufacturers has outpaced sales,” Fitzpatrick said. “In my opinion the ICE marketplace will not truly be upset by EVs for a number of years, considering small truck and SUV sales in the U.S. and a lack of a viable alternative in an EV vehicle with any real range and capacity. The secondary vehicle market for EVs also is terrible – they notoriously lack resale value.”
Fitzpatrick further explained that the 2035 goal was set by the present administration and a number of vehicle manufacturers jumped on board.
“A change in administration will no doubt change the focus. The U.S. and all countries lack the infrastructure to handle this. Think of all the vehicles that park on city streets, are we going to run extension cords down the sidewalk? Californians are already receiving notices asking them not to charge their vehicles because of power demands. Plenty of Americans drive over 100 miles a day, we are not ready. Consider the range issues associated with temperature, an EV on a winter morning in New England can lose 30 percent of its range in cold temperatures,” Fitzpatrick said.
EVs will eventually impact the internal combustion engine (ICE) marketplace in a significant way. But in the short term, both in Europe and North America, the ICE marketplace has not collapsed.
“EVs are still more expensive, and drivers are still anxious about driving range limitations and lack of charging infrastructure,” Leblanc said. “And after stopping the production of ICE vehicles, the supply of spare parts must be ensured in the automotive industry for at least another 15 years. But the progressive shift of a significant proportion of the market away from ICE into EVs has started, and it has passed the point of no return.”
Even though major OEMs still produce and sell ICE vehicles, they also have stopped or significantly reduced R&D investments into ICE technology improvements to shift them towards EV technologies.
“Such EV investments will increase driving range while decreasing production cost. For example, Boston Consulting Group estimates that battery cell production cost will decrease by 40 percent to $62 per kwh by 2030. Such improvements will facilitate the demand shift to EVs,” Leblanc said.
And while some auto manufacturers have set their sights on 2035 as the goal to stop producing ICE vehicles, and having 100 percent EVs in production, it is difficult to judge if this will come to fruition. Government regulations, such as the European Union ban of ICE from 2035 or the electrification incentives of the Inflation Reduction Act in the U.S., are giving clear directions.
“For manufacturers, shifting away from ICE vehicles is a massive technology and industrial challenge but also an opportunity to renew their models and sustain their sales for decades. So after a more or less painful adaptation phase, I’m quite confident that OEMs will make it happen,” Leblanc said. “But if physical constraints like the availability of raw material such as lithium or nickel cannot be overcome either by additional mining or by alternative battery technology, then neither a strong government push nor all the efforts of the OEMs will be sufficient to achieve 100 percent EV by 2035. In this case, since people will continue to be mobile, they’ll do it in ICE and hybrid vehicles for a while longer.”
And when it comes to automotive recycling, the team at TRIGO Group believes that recycling is not an option but is an imperative for all battery manufacturers and users for three main reasons.
First, recycling will help to secure the future supply of batteries in a world where battery demand will increase by 25 percent per year while raw material is limited. For example, manufacturers are looking to better recycle scrap and to procure recycled, non-virgin raw material.
Second, it will reduce the carbon emissions of the battery manufacturing process. Over the life cycle of an EV, its production represents more than half of the car’s total carbon emissions (and a much higher proportion in a clean grid environment). So recycling materials during production will be a key lever to reduce carbon emissions.
Lastly, recycling the batteries themselves will be a way for manufacturers to monetize the residual value of the batteries while limiting their total life-cycle carbon footprint.
“Overall a circular value chain should not be seen as a burden but as an opportunity for EV manufacturers and other players to create value,” Leblanc said. “Think about this: if battery demand increases by 25 percent per year over the next few years, so will the amount of material available to be recycled.”
Fitzpatrick said the only potential upside he sees is in the recycling space. “The vehicles have a lot of rare earth metals including dysprosium, terbium, neodymium, and of course lithium and cobalt in the batteries,” Fitzpatrick said. “None of these elements are sourced in the U.S. They come from China, The Congo and Chile. The bottom line is that EVs are great for a portion of the population today and as infrastructure improves they will become more viable. Americans purchase vehicles to fit their lifestyles, they don’t rework their existence and work day around a vehicle.”
