Abstract:

The electric vehicle (EV) industry has grown significantly in the last few years. The main EV component is the battery, which accounts for one quarter to one third of the vehicle’s total cost of production. Two important materials of lithium-ion batteries today are lithium and cobalt. These are found in large amounts in developing countries. The growing interest and projected increase in manufacturing EVs and the subsequent rising demand for specific minerals presents a key opportunity for developing countries that are some of the main producers and suppliers of these minerals. Their ability to take advantage of this opportunity, however, is dependent on economic and political readiness to manage sustainable investment as well as the trade policies. Evolving technology also brings risks to raw material producers. This policy brief considers the impact of the EV raw materials boom on developing countries and how trade policy could play an important role in helping them capture value from this expansion while managing the risks of overinvestment.