Santa Fe, New Mexico
It’s fair to say that e-bikes, especially e-mountain bikes, dominate discussion throughout the global bicycle market.
Companies big, small and mid-size are betting that e-bike demand will lift the industry to soaring heights of new profits, driven by a near-universal acceptance—at least within the industry—that e-bikes could be a significant factor in reining in global warming and boost commuting to record levels.
And, at the moment, money is flowing like a rain-swollen river into the industry.
But I would urge caution on at least four fronts, including the volatile cost of raw materials for lithium-ion batteries, massive environmental degradation in raw material mining, and the need for vast amounts of power and water to mine and produce the final product.
The fourth front is the rapidly expanding demand for batteries by automakers – that has set off a frenzy of exploration for new lithium sources in the US and elsewhere as forecasted demand for electric vehicles (EVs) promises record sales worldwide.
And for all the industry drum beating over e-bikes as some sort of environmental saviour… not so fast. What passes for great PR could be thought of as clever, or in the case of the bicycle industry perhaps ignorant, green-washing.
“Batteries are not environmentally benign. They use lithium and cobalt and other rare metals whose supply chains are environmentally and socially questionable at best.”
As a pundit at the New York Times put it: “Batteries are not environmentally benign. They use lithium and cobalt and other rare metals whose supply chains are environmentally and socially questionable at best.”
Still, it only takes a few minutes to survey the literature to learn that raw materials like lithium, cobalt and nickel – essential ingredients – pose a long list of environmental impacts on land and water. Wildlife and people who live near these mines are almost an afterthought. Demand outweighs such concerns. For example, a Tesla Model S uses 140 pounds (62 kilograms) of lithium, enough to power about 10,000 smartphones. Tesla is projected to deliver 1.4 million units this year. Do the math.
Benchmark Mineral Intelligence predicts rising mineral prices will soon drive the cost of an EV up by US$1,000 (A$1,388) per unit.
It’s all about raw materials, baby. So here are some stats to mull over.
Let’s start with cobalt. The top five suppliers are the dysfunctional Democratic Republic of Congo, which supplies 60% of the world’s cobalt, followed by Russia, also dysfunctional, Australia, the Philippines, and Cuba, another unreliable actor. The current price (at 9th February) is about US$65,000 (A$90,277) per metric tonne. That’s up from US$31,627 (A$43,926) per ton (Editor’s note: wherever ‘ton’ is written in this article it refers to imperial tons which are 10% lighter than metric tonnes) in January 2020 – a 106% rise.
Check out nickel sulfate and the core price for nickel. On the London Metal Exchange, nickel is going for US$23,814 ($33,075) per ton, up from US$13,859 (A$19,248) a ton in January 2020 (about 72%).
And lithium carbonate, the magic mineral these batteries need, is up 712% in China, which has a stranglehold on the Chinese market. And let’s not forget the myriad of other chemicals used in the battery-making process. Some analysts refer to these minerals as “white petroleum”.
As an aside, Australia is the world’s largest exporter of lithium ore, mostly to China, and a major US company, Albemark (NYSE: ALB), has a big stake in Australian mining at its Wodgina and Kemerton operations in WA. Albemark also will have completed its purchase of Guangxi Tianyuan New Energy Materials Co. Ltd, a lithium converter located in Guangxi, China, sometime early this year. Chile is the second largest supplier of lithium.
Consider this then … the bicycle industry is competing with the fast-growing EV market – cars, trucks and buses – as well as a mind-boggling array of other products, such as smartphones, for lithium-ion batteries.
These industries have scale, plus financial muscle, and can better absorb skyrocketing mineral prices now driving the cost of batteries.
And let’s include rising global inflation, potential instability in China over COVID restrictions, and the current geopolitical turmoil between Western powers, Russia and China.
Bike biz demand for lithium-ion batteries, on the other hand, is akin to a pimple on the overall market. Battery makers and the burgeoning EV industry will set the price; the bicycle industry and its consumers will pay the going rate.
How will that impact the price of e-bikes when:
- The battery is as costly – if not more so now – than the drivetrain?
- Replacement batteries for top brands are pushing US$800 (A$1,115)?
Suppliers can only engage in so much creative down-spec’ing to meet consumer price expectations.
This could bode ill for what is currently an expansionist strategy for suppliers and higher retail prices – already fairly high for most e-bikes.
That will test the wallets of consumers and future demand.
But it’s not all bad news on the e-bike environmental front. Here are three mitigating factors:
- e-Bike batteries are typically 100 times smaller in capacity than electric car batteries. So that Tesla using 62 kilograms of lithium has the same battery capacity as about 100 or more e-bikes combined. Therefore, whatever the negative environmental political and social impacts of lithium and other battery mineral mining might be, they’re far less on a per vehicle basis for e-bikes compared to e-cars.
- Battery recycling is still in its infancy, with small scale and high expenses, but has the potential to lower the mining impacts per vehicle in the longer term.
- Multiple new battery chemistry research projects and breakthroughs at various universities and companies around the world. It’s worth remembering that batteries have a long development journey from laboratory prototypes to large scale commercial use and many fall by the wayside.
One final point, if I may. At some point, and who can tell when, consumers will come to understand that the electrification of transportation at all levels imparts an exceedingly high environmental cost on the planet. It’s a pollution emission balancing act.
Here’s a Developed World question: Do e-bikes, used in all their configurations, improve the overall global environment? I doubt it, personally.
But riding a Developing World bicycle? Now that makes sense, and it would be wise for the industry to remember it.