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Musk sees continued oil and gas role, plays down EV battery metal sourcing issue

Highlights

Biggest EV constraint is processing metals to sufficient purity

More oil and gas, continued nuclear needed on transition path

Scale of metals processing needs comparable to oil and gas sector

  • Author
  • Nick Coleman
  • Editor
  • Manish Parashar
  • Commodity
  • Electric Power Energy Transition Metals

Tesla CEO Elon Musk on Aug. 29 stressed the continued role of the oil and gas sector in ensuring a functioning "civilization" for humanity, while playing down concerns over the availability of metals needed for batteries in electric vehicle growth.

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Speaking at the Offshore Northern Seas conference in Norway, Musk said the world was on track for electric vehicles to account for 50% of cars manufactured in 2030 and 80% in 2035, partly due to zero emissions mandates by states and national governments.

EVs accounted for nearly 10% of global car sales in 2021, according to the International Energy Agency, which estimates EV growth could displace 4.6 million b/d of oil demand by 2030 under its Announced Pledges Scenario.

Musk said EV adoption could go faster, particularly if difficulties over battery metal processing were overcome, but he did not support demonizing oil and gas.

"For humanity to have a compelling future, for civilization, we must have a clear path to a sustainable energy future. I'm not someone who tends to demonize oil and gas. This is necessary right now or civilization could not function," Musk said.

"At this time we actually need more oil and gas not less, but simultaneously moving as fast as we can to a sustainable energy economy," he said, praising Norway's progress developing floating offshore wind farms.

Alongside hydropower, geothermal, wind and solar, Musk said he was "pro-nuclear," adding, "We should really keep going with the nuclear plants."

Asked about barriers to EV adoption, Musk said sourcing metals was not the main obstacle. It follows fears battery makers could become dependent on a limited number of metal-producing countries for materials such as lithium, which Musk described as "one of the most common elements."

He said the issue for EV manufacturers was the processing capacity needed to ensure sufficient purity of battery metals, both in vehicles and stationery batteries attached to energy grids, comparing the scale of the need to the worldwide oil and gas industry.

Battery challenge

Noting Tesla's plans to unveil a location for a fourth battery gigafactory potentially this year, he said: "The main limitation is not that these metals are tremendously rare, but there's a tremendous amount of processing to take the ore and turn it into battery-grade materials."

"It's going to be increasing the rate at which we can convert the ore into battery grade materials that will set the rate at which we can [produce] electric vehicles and stationary battery packs" needed to store solar and wind power, he said.

"The battery anode and cathode have to be extremely pure in order for the battery to last for a long time ... There's not a raw material constraint."

"A tremendous amount of processing needs to happen ... at the sort of scale that is currently comparable to the world oil and gas industry."

The IEA has highlighted battery metals as a constraint for EV growth, saying in a 2022 report that battery prices had fallen less quickly in 2021 than the previous year and battery prices could go up this year due to metals price increases.

It noted the small role of Europe and the US in the battery supply chain while saying "over half of lithium, cobalt and graphite processing and refining capacity is located in China."

The IEA also said Russia's invasion of Ukraine had "created further pressures, since Russia supplies 20% of global high-purity nickel."