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The Hidden Cost of Electric Cars

The economic value of the global Lithium market is expected to reach $18.99 billion by the year 2030, according to a grand view research report published in March 2022 by Research and Markets. This shows an approximate 12% compound annual growth rate (CAGR). Why, and how is this trend present? What are the potential implications of the rapid growth and expansion of the metal market?


A market research report conducted by Roskill noted the price of lithium per tonne has more than doubled since 2010. Economic trends are following the footsteps of demand and supply issues, resulting in the cost reaching an all-time high such as in 2018 when electric vehicle production demand skyrocketed.

Lithium Cost Trend

The exponential growth in the lithium market is directly correlated to the increased demand for the product due to its uses in manufacturing electric vehicle lithium-ion batteries. Other uses of the metal can be noted in pharmaceuticals, with a drug prescribed for the treatment and management of psychiatric disorders, as well as the manufacturing of other electronic devices, such as smartphones, and air-conditioning systems.


In January 2023, General Motors announced plans to invest $650 million in Lithium Americas to secure exclusive access to the product being extracted from the most significant U.S. source, the Thacker Pass mine. General Motors further commented on the goal to achieve production of over 400 000 electric vehicles by mid-2023. Due to the concentration of resources, a possible rise in the manufacturing and procurement costs associated with other lithium-using industries can be expected.

The negative implications of this surge in demand may range from environmental damage to the exacerbation of current social concerns, such as illegal mining, child labour in mines, and accessibility issues for manufacturers of medications and other electronic devices, leading to overall lithium price escalations.


As for environmental damage, the leading opinion is contradictory as electronic vehicle production is driven by an effort to decrease carbon emissions. With the European Union (EU) debating whether lithium can be considered a hazardous material, project costs are also expected to increase. Environmental protests taking place all over the globe, namely the instance in Serbia at the start of 2022. Thousands of protesters demanded the revoking of Rio Tinto’s (an Anglo-Australian mining corporation) lithium licenses. Other concerns focus on water usage and potential harm to surrounding ecosystems. 


In light of the growth in lithium mining projects, both in number and size, there has been a minor opinion raising concerns about illegal mining. While there have been no public accusations of illegal mining, the demand for other important metals such as cobalt, has also surfaced; cobalt is a key component of lithium-ion battery production.

The moral issue of cobalt mining has been questioned, coupled with the metal being primarily mined in the Democratic Republic of the Congo (DRC): exploitation in child labour and human rights abuse once again bare their teeth from the shadows of positive environmental promises made by the electronic vehicle industry. Developing nations with relatively loose labour laws and regulations have a high and unwavering prevalence of child labour in the mining industry, such a concern is often addressed by NGOs such as Amnesty International.


Although small, the healthcare item is often scratched from the list of considerations examined concerning lithium mining advancement and its repercussions. Yes, on the side of protecting the increase in healthcare costs for those reliant on the psychiatric pharmaceutical, but more importantly, from the perspective of those who will be exposed to lithium extraction: the long-term health issues will further impair communities with little or no access to adequate healthcare services.


Although the social issues presented are not directly linked to lithium-ion battery manufacturing for electric vehicles. The point at issue results from multinational corporations' mining practices in nations suffering from human rights abuses. Further heightened by not taking corrective measures to ensure ethical mining practices, as well as to enrich surrounding communities.

The occurrence of child labour in mining, amongst other things, ultimately evolves into the demise of already-debilitated nations in respect of educational advancement. Additionally leading to long-term health conditions for the ‘future’ working class of these nations, further aggravating the economic situation of these nations and communities.


The discovery of lithium deposits impacts the cost of lithium per tonne, especially considering the trends seen over the years. In February 2023, the Indian government announced the discovery of an estimated 5.9 million tonnes of Lithium in the Reasi district. The issue arises when looking at the political and economical situation in that specified location, where ethnic and religious groups are dominating the area. A particularly strained situation, where the government is opposed, especially due to religious tension between an ethnonationalist Hindu government and the combined demographic location inhabited by both Muslim and Hindu civilians.

The consequences of newly found lithium deposits cannot be anticipated, particularly when questioning the augmentation or enfeeblement of local government support. Whilst conceivable benefits range from employment options to community and infrastructure investments. That said, the all-too-possible, damaging results of this discovery can be cataclysmic for an already enervative region, rich with conflict. 


With the question of environmental damage on the minds of youth and investors alike, harming local ecosystems still may weigh less than the desire for electronic cars. Regardless of social inequality, conflicts, religious disputes, exploitation, and child labour practices, the geopolitical consequences stemming from the supply and demand of another non-renewable material may be unintended, but ultimately still undeniably tenable. The very real, and unstable conditions of our world in connection to resource access pose the final questions: What is the overarching price of manufacturing electric cars? And who is paying?


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Tags: #electricvehicles #market #mining #supplyanddemand #lithium #batteries


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