Geopolitics and the electric vehicle revolution
With Benjamin Jones, Viet Nguyen-Tien and Robert Elliott
This article appeared in CentrePiece, the magazine of the Centre for Economic Performance at LSE, in Autumn 2023. It is a longer version of our LSE Business Review post of June 2023.
It starts from the scale of the car industry and its shift to electric vehicles, with global sales of EVs passing ten million in 2022. The US and the EU have answered China’s lead with large subsidies tied to local content and sourcing, a form of green protectionism. Electric vehicles need far more copper, lithium, nickel, cobalt, graphite and rare earths than conventional cars, and with long lead times for new mines, prices have risen and shortages look likely. China and East Asia dominate cell manufacturing and refining, and the factories planned in the West will meet only part of 2030 demand.
The article then looks at resource-rich developing countries, which stand to gain if they build the institutions and infrastructure to do so, and at the environmental and social risks of mining cobalt and lithium, which are driving new rules on responsible sourcing.