EVs – The OM Blog by Heizer, Render, & Munson

OM in the News: America Now Has an EV Rust Belt

At first, North America’s biggest auto-parts supplier was thrilled to snag the job of making enclosures for the batteries in GM’ new electric pickup. The contract was so big—and promised to be for years to come—that Magna International built a new $575 million factory in a Michigan cornfield. And Michigan even offered a $44 million incentive package to draw the promise of new jobs–a topic in Chapter 8.

Five years later, that million-square-foot plant is mostly empty and losing money, a casualty of America’s messy breakup with EVs, reports The Wall Street Journal (April 1, 2026). It is one of dozens of now desolate EV parts plants across the country. It can take years to pivot a factory and supply chain from one type of vehicle to another. And it would take 4-6 months of higher gas prices for most Americans to reconsider more fuel-efficient vehicles– an unlikely prospect. Detroit automakers have scrapped their boldest EV dreams—and are looking beyond $50 billion in charges tied to broken supplier contracts and wasted investments.

The deserted Magna factory in St. Clair was expected to stay busy for years.

Magna, which has more than 300 factories around the globe and parts in nearly every car on the road today, has been left holding the keys to the St. Clair, Michigan building that is bigger than 20 football fields. The Canadian company needs to find a second life for the factory and the hulking rows of assembly-line robots. A few years ago, Magna had plans to build an entirely new business unit around EV battery enclosures.

The EV slide is reverberating through the automotive industry’s sprawling supply chain. Multinational companies such as Magna, Dana and BorgWarner slashed jobs and closed plants due to the EV pullback, while a string of smaller manufacturers shut down altogether. Last year, more than $20 billion in previously announced investments in EV and battery facilities were wiped out.

Smaller suppliers have little recourse to recoup costs when automakers cancel a vehicle program and stop buying parts. They typically absorb the upfront cost of setting up an assembly line with the expectation of recouping it over time as parts are shipped. GM’s supplier contracts were struck with the expectation that GM would be building one million EVs a year. By December, 2025 the company was selling around 8,000 a month.

Classroom discussion questions:

Discuss the typical incentives offered to attract a new plant.
Why has the EV trucking business been especially hard hit?

OM in the News: How China’s BYD Is Squeezing Suppliers in the EV Price War

China’s electric vehicle-makers are locked in a spiraling price war, writes The Wall Street Journal (July 14, 2025). Their suppliers say they are bearing the brunt.

The country’s biggest automaker, BYD, recently lowered the price of a starter EV to less than $8,000. To hit such low prices, suppliers say the company is squeezing them by demanding lower prices and dragging out payment periods.

BYD, or Build Your Dreams, often pays suppliers at first with an electronic IOU it calls D-chain (after the Dreams in its name). The suppliers may wait for the better part of a year before the notes can be cashed in. Such payment methods are a nightmare for cash flow. But suppliers fall into line, desperate to keep orders coming. Suppliers can sell the D-chain to a broker or bank, but that typically means losing percentage points of the face value to fees.

Overcapacity and lackluster consumer demand are driving the trend. China’s car business is one of many industries hit by a deflationary wave that threatens its economy.

The Chinese phenomenon is known by the word neijuan, which refers to a situation in which people work hard and compete fiercely without anyone getting ahead. Suppliers say they are now asked for price cuts as often as once a month. Carmakers like BYD are tightening their audits and demanding information on what suppliers pay for materials. They ask suppliers to submit electricity bills, worker records and other cost data to justify their prices. And carmakers go to the suppliers’ factories to check whether the reported number of workers on production lines is accurate.

“Market competition will grow fiercer in 2025, ushering in a final showdown, a knockout round,” BYD wrote, calling for a “concerted effort from our entire supply chain to achieve sustained cost-cutting.”

But the chairman of one large Chinese parts supplier penned an open letter which went viral for capturing their concerns. “I have a dream that one day in China’s auto industry, leading automakers and large suppliers will have a social conscience,” he wrote.

Classroom discussion questions:

Why is BYD using the D-chain system?
What can suppliers to BYD do in response?

Guest Post: EV Charging– Driving Toward Universal Accessibility

Prof. Misty Blessley at Temple U. looks into an issue facing EV owners.

New Jersey is removing Tesla Superchargers from Turnpike and Parkway service areas and replacing them with universal chargers provided by Applegreen Electric. These new stations will feature CCS1, CHAdeMO, and J1772 connectors, making them compatible with a wider range of EVs. Tesla owners can use these chargers with adapters. Most newer Tesla models can accommodate J1772 (Level 2) and CCS (DC fast charging) connections through external adapters.

This shift reflects a broader trend toward open-access infrastructure aimed at increasing accessibility for all EV drivers. It also introduces new OM considerations around the production, availability, and use of adapters.

The Shift Toward Open Infrastructure
New Jersey’s decision mirrors historical tech battles between proprietary systems and open standards. Tesla, like Apple in its early days, built a closed ecosystem. The state’s move to universal chargers signals a shift toward interoperability over exclusivity. As one article put it, “Up until recently, the vast network of more than 1,600 Tesla Supercharger fast EV charging stations in the U.S. was a perk exclusive to Tesla owners.” That exclusivity is
now being replaced with inclusivity, with the cost falling on Tesla drivers now being dependent on an external device.

In this context, adapters become the modern equivalent of USB driver software, seemingly minor components that play a major role in user experience and system reliability.

Adapter Implications for Operations and Supply Chain
 Forecasting and Demand Planning: Widespread reliance on adapters will drive new demand. Manufacturers must scale production, distribution, and after-sales support.
 Inventory Management: Retailers and even rest stops may need to stock or rent adapters, creating SKU complexity.
 Station Capacity: Adapters can increase setup time, and Level 2 chargers provide only 13–25 miles of range per hour—far slower than Tesla’s V3 Superchargers (over 200 miles in 15 minutes), potentially reducing the number of EVs that can be charged at a station.

 Risk and Reliability: Adapters introduce new points of failure because they are mechanical devices prone to wear, damage, or user error. This raises customer service and warranty cost concerns.

Classroom discussion questions:
1. In Ch. 11 of your Heizer/Render/Munson textbook, component standardization is discussed. What are the benefits of standardizing EVs and charging stations?
2. What advice would you provide to operations managers on the adapter implications mentioned above?

OM in the News: EV Supply Chain Headaches

Makers and suppliers of electric cars are dealing with diminishing cash and weak sales. Hurdles are ripping through the automotive supply chain, crunching demand for batteries and materials such as lithium that power them, reports The Wall Street Journal (Dec. 1, 2024). “It’s a whole ecosystem that is collapsing. It’s just a disaster out there with consumer demand going down,” said the CEO of a clean-energy investment bank.

Rivian, which has burned through more than $19 billion since 2021, is facing a shortage of copper wiring for its electric motors, which caused it to slow or shut down assembly lines

Several high-profile companies, including electric SUV maker Fisker, bus manufacturer Arrival, and Swedish-based battery maker Northvolt recently filed for bankruptcy. At least a dozen other startups, specializing in EVs or batteries, are also at risk.

Many of these young companies have been hammered by cooling demand for EVs, rising costs and supply-chain obstacles that have hindered their ability to put out new products quickly. And established Western automakers such as Ford and GM, which have pledged billions of dollars to expand their EV lineups, are now delaying or pulling back some future investment as sales haven’t materialized.

Northvolt was among the industry’s most stunning implosions. The startup, which sought to make batteries with a lower carbon footprint, had raised $15 billion from backers including VW and Goldman Sachs. But the weakening EV market resulted in BMW cancelling a major order.

Li-Cycle Holdings, a firm that has promised to turn recycled batteries into useful materials, had an approved $475 million government loan to help build out a plant in Rochester, N.Y. But it now only has enough cash on hand to sustain operations through March, 2025 and has paused construction on the factory.

Electric truck maker Canoo is also burning through cash and has laid off a quarter of its workforce in Oklahoma. It had received a $113 million incentive package from the state to create 1,300 jobs at its vehicle and battery plants and had promised to quickly hit $1.4 billion in revenue this year. “It feels like being punched in the face every morning trying to develop vehicles that have all their components for so long been outsourced to China,” said Canoo’s CEO.

Classroom discussion questions:

What issues are EV component suppliers facing, and how can they deal with them?
What are the implications for operations managers?

OM in the News: Retreating EVs and the Impact on Supply Chains

“Ford Motor’s decision this week to kill a highly touted future electric vehicle is a sign that the industry’s pullback on EVs is deepening,” writes The Wall Street Journal (Aug. 23, 2024). It is canceling plans for an electric SUV once touted as a “personalized bullet train.” The move added to the drumbeat of news from carmakers of delayed or scrapped investments into EV models, factories and battery projects.

Dealers’ lots are getting pretty crowded as EVs from Tesla, Ford, Mercedes, and more fail to move.

GM, VW, Mercedes and other automakers also have curbed their EV ambitions in recent months. Taken together, the walked-back plans are an acknowledgment that the big investments outlined at the start of the decade got ahead of the consumer’s appetite for a full switch to EVs.

Delaying some EV investments will conserve cash and buy automakers time to lower their battery costs and other EV-related expenses. EV startups including Rivian, Lucid and Polestar are laying off workers, and Fisker has declared bankruptcy.

But cuts to planned EV output have hurt the parts supplier base, which has had to adjust its business. Magna, one of the world’s largest auto-parts suppliers, had been gearing up to make battery trays, seats and other parts for Ford’s now-scrapped electric SUV. Dana, another large supplier serving Ford and Stellantis, had expected sales of battery-cooling systems and other EV-related components to jump by 1/3 this year. “Like most things that are new or disruptive, a lot of times forecasts and expectations can get ahead of some of the practicalities,” said Dana’s CFO.

The cost of batteries is so high that most big automakers are in the red on their electric offerings. Ford’s EV business is on pace to lose $5 billion this year, with losses averaging $44,000 per electric vehicle sold!

Instead of offering the electric SUV, Ford plans to produce hybrid, gas-electric versions. It also delayed for a second time the opening of a new EV truck factory, the largest investment in its history, which is now set for a 2027 opening, two years later than initially planned.

New emissions rules from the Biden administration will in effect require a heavy dose of EVs in the late 2020’s. To comply, automakers will need to introduce more plug-in hybrid vehicles. Car companies are likely to focus on fully electric systems for small- and midsize vehicles, and hybrids for larger ones.

Classroom discussion questions:

Why has the shift to EVs cooled?
What is the impact on 1st and 2nd tier suppliers?

OM in the News: The Mercedes-Benz EV on Fire

It took just seconds for an underground South Korean residential parking lot to be engulfed in flames. The culprit: a Mercedes-Benz EQE electric vehicle that had not been charging.

The blaze incinerated dozens of cars nearby, scorched a further 140 vehicles and forced hundreds of residents to emergency shelters as the buildings above the parking lot lost power and electricity. Nobody died, but the fire took eight hours to extinguish. Cars with internal combustion engines are more likely to catch fire than EVs. But when EVs do burst into flames, the rechargeable lithium-ion batteries get hotter and the fire takes longer to stamp out, writes The Wall Street Journal (Aug. 8, 2024).

In recent years, General Motors recalled tens of thousands of its Chevrolet Bolts in the U.S. over risk of battery fires. Hyundai pulled roughly 80,000 electric sport-utility vehicles after roughly a dozen caught fire. Last September, a Nissan Leaf ignited while charging in Tennessee, and the fire required more than 45 times the water needed for a gas-powered-car fire to be extinguished.

Automakers have grown more cautious about EV launches amid modest demand. Sales of fully electric models in the U.S. rose 6.8% through the first half of the year, a sharp deceleration from near 50% growth in 2023.

The perceived risk of EVs is particularly acute in tightly packed South Korea, a country about the size of Indiana with 52 million people. Outdoor residential parking lots are relatively uncommon. The nation’s ubiquitous high-rise apartments often feature underground parking, where firefighters must contend with restricted access. The country had already been on edge about battery-related fires, after a blaze at a lithium-battery factory in June that killed nearly two dozen people.

In recent days, LG Display recommended that employees at its main factory complex park their EVs outside. The country’s main international trade association, whose offices are located in central Seoul, said it would accelerate plans to relocate EV charging ports to its aboveground lot. One of the country’s largest telecommunications firms, KT, has held discussions about barring EVs from parking underground.

Classroom discussion questions:

Which of the 10 OM decisions in your Heizer/Render/Munson text deal with this issue?
What are the OM implications of the South Korean fire?

OM in the News: The Lithium Battery Dilemma

To the makers of smartphones, power grids and electric vehicles, lithium—the lightest metal—allows batteries to become supercharged, underpinning hopes for a greener economy and longer-lasting devices. But the very traits that make lithium game-changing for energy storage can pose overpowering challenges should the batteries ever catch fire, reports The Wall Street Journal (June 28, 2024). Incidents involving lithium-battery fires are becoming more common around the world, raising safety concerns.

A Tesla lithium-ion battery catches fire in Washington state

The world recently saw the risks of lithium-battery fires in South Korea, where at least 23 workers died. Video footage of the fire showed occasional flashes that produced thunderous booms like a detonated bomb.

Water isn’t always an effective combatant for certain types of lithium-battery fires, leaving little option other than waiting things out or using costly suppressants. The lithium produces searing temperatures. The fire’s ignition is more intense than an oxy-acetylene torch, which can be roughly 5,000 degrees, or about five times hotter than house fires. It will literally cut through a firefighters’ protective clothing and their leg if it’s coming out from underneath their vehicle. Battery fires are a growing concern for firefighters worldwide.

So-called “lithium-ion” batteries are rechargeable and widely used in smartphones, PCs and EVs—and are the subject of the bulk of such fires, often due to overheating. Extinguishing a lithium-ion battery fire for an EV takes longer and about three times as much water than a regular vehicle, on top of the exposure to carcinogenic chemicals.

Sometimes the safest option is to let a battery fire burn. That was the case in 2021, when a Tesla battery caught fire while being installed at an Australian power storage facility. Responders allowed the blaze to burn out over six hours, while keeping nearby units cool.

Lithium is widely viewed as a key future energy source, given its outstanding ability to retain high amounts of energy compared with other metals. The properties of lithium that make it suitable for energy storage also pose risks, but the metal in its various forms has been harnessed to operate safely for a variety of uses.

Classroom discussion questions:

How many lithium-ion batteries have actually exploded in the past few years?
How does this impact the growth of EVs? Is it a design issue?

OM in the News: Apple, Core Competencies, and Electric Cars

In a perfect example of what happens when successful firms decide to stretch beyond their core competencies (see Chapter 2), Apple has just put an end to its decadelong push to build its own electric vehicle. Once seen as an effort having the potential to transform the auto industry, the secret group inside the iPhone giant—known internally as Project Titan—has been shut down, reports The Wall Street Journal (Feb. 28, 2024).

That EV transformation, which has been under way for years without Apple, continuously increased the level of difficulty Apple faced as it spent billions on R&D for the project trying to catch or exceed the capabilities made available during a revolution led by Tesla. The car group inside Apple was the subject of several rounds of restructuring and shifting strategies over the years as Apple struggled to figure out a path forward. Some executives pitched deep partnerships with automakers or even outright buying an automaker, but none of that materialized.

Since the mid-2010s, the specter of Apple introducing a car had rattled auto executives. Cars were becoming computers on wheels, with updateable features and large touch screens—morphing into a sort of device that seemed to play right into Apple’s strengths. “There was a view that if they ever did put out a car, that would be tough to compete with. Still, an Apple vehicle was seen as a distant threat because everybody knew how hard it was to build cars.” ” said a former GM exec.

When the effort kicked off in 2014, Apple imagined a fully autonomous vehicle. Over time, it scaled back those ambitions to where the vehicle automates only some parts of the driving. With these strategic changes, leadership was also in near constant flux.

“Apple canceling this project is a sigh of relief for us,” said an investment manager. “When you looked at Apple’s future initiatives, the car project was always the most far-fetched for Apple. This just isn’t in their wheelhouse. Instead, it is better Apple will be redeploying engineers and investments into areas like artificial intelligence that could help its consumer electronics business.”

Classroom discussion questions:

What is Apple’s core competency?
Apple also tried to enter the TV business in 2014. ( See the Time article on June 1, 2015), What happened in that venture? Compare it to the EV project.

OM in the News: The EV Battery’s Supply Chain Problems

The Swiss mining giant. Glencore, is suspending production at an unprofitable nickel operation in New Caledonia

The global EV revolution has been losing momentum as buyers are more aware of the vehicles’ higher prices, range limitations, and charging station shortages. So automakers such as Ford, GM and Volvo are delaying investments and striking a more cautious tone about the outlook for EV consumer demand.

But a big part of that revolution has been in the development of the core of EVs, namely the batteries. “Producers of lithium and nickel, which are used in lithium-ion batteries for EVs, have been stalling projects and closing mines to save cash,” writes The Wall Street Journal (Feb. 20, 2024). Prices of lithium are down as much as 90% since the start of last year, while the price of nickel has halved.

When Albemarle, the world’s most valuable lithium company, last year announced plans for a $1.3 billion plant in South Carolina, it was hailed as transformative for the state. The high-tech project was designed to process different sources of lithium and serve as a supplier of the critical mineral for South Carolina’s burgeoning EV industry, producing enough lithium for 2.4 million vehicles annually. Less than a year later, those plans have been hobbled by the crash in battery metal prices, undercut by a slowdown in EV sales in the U.S. and China. Albemarle has deferred spending on the project, amid companywide cost-cutting that includes layoffs.

Now the world is suddenly awash with the metals after producers ramped up new projects to feed the global EV industry and compete with China. (We note that boom-and-bust cycles are commonplace in metals markets, given demand can be unpredictable and new mines typically take many years to develop).

In the more-established nickel industry, some miners say they have been left with no choice but to close unprofitable mines. The downturn has wiped out more than a fifth of Australia’s mine supply. Mothballing any mine is a difficult choice, as companies pay ongoing maintenance costs that can run into millions of dollars a month when they aren’t producing anything to sell.

Classroom discussion questions:

What is the US doing to create supply chains for EV battery components? Is it working?

2. How do mining firms forecast the demand for minerals that are so dependent on auto demand?

OM in the News: The Transition to Electric Vehicles Sustainability Dilemma

A mining exploration camp in the *Ring of Fire*

The pace of the global transition to electric vehicles depends on the future of a remote region in Canada known as the Ring of Fire. Located underneath a distant, swampy expanse in Northern Ontario that is cut off from major roads, the Ring of Fire is seen as one of the world’s most important untapped sources of nickel, copper and cobalt—metals essential for making the batteries that power EVs.

But the precious commodities are buried under a vast ecosystem of peat bogs that hold more carbon per square foot than even the Amazon rainforest. Digging them up could trigger the release of more greenhouse gas than Canada emits in one year, turning one of the earth’s biggest carbon sinks into a major source of emissions.

A debate over how, or whether, to tap in to this mother lode, has touched off a fight between mining companies, climate advocates, and indigenous groups as demand for cleaner energy and EVs has surged worldwide, reports The Wall Street Journal (Sept. 29, 2023).

“If I have to hop on a bulldozer myself, we’re going to start building roads to the Ring of Fire,” said the head of Ontario province, which recently signed deals with automakers VW and Stellantis to build battery-making factories in the province. Opponents warn that disturbing the area could have far-reaching consequences.

The Ring of Fire, an area larger than Rhode Island, was formed 3 billion years ago. A retreating ice sheet left sodden, boggy terrain that covers a wealth of minerals. This deposit is “the most valuable nickel deposit, undeveloped, in the world,” said one mining CEO. “We’re not going to be able to switch off fossil fuels, which are destroying the planet, unless we have abundant supplies of nickel.” He estimates the deposits of platinum, palladium, copper and chromite could be worth $67 billion. As EV production has increased, demand has surged for such metals, which are key components in making EVs and military equipment.

Projects like the Ring of Fire represent a new era for the mining industry. Long considered a dirty and often unfortunate legacy of the industrial economy, mining has taken on a green sheen. Extraction is an essential component of the global movement toward electrification.

Classroom discussion questions:

What is the pro mining stance?
The anti-mining position?

OM Podcast #6: The EV Battery Supply Chain

Welcome to our latest Operations Management podcast! Today, Barry Render and his guest, Providence College Professor Jon Jackson, discuss an important issue facing the auto industry: the supply chain for electric vehicle batteries. Their talk includes battery end-of-life issues, recycling in the U.S., and a look ahead to 2035 when the E.U. and several U.S. states will ban gas-powered vehicles.

Transcript

A transcript in Word of this podcast is available by clicking on the word Transcript above.

Instructors, assignable auto-graded exercises using this podcast are available in MyLab OM. Contact your Pearson rep to learn more! https://www.pearson.com/us/contact-us/find-your-rep.html

OM in the News: The U.S. Enters the Lithium Supply Chain

These days, companies in the south aren’t looking to find more oil—they are instead prospecting for lithium, a metal that is increasingly prized around the world as an essential ingredient in electric-vehicle batteries. “If the U.S. is to ease its dependence for lithium on other countries such as China, it may need Arkansas to lead the way,” writes The Wall Street Journal (July 21, 2023).

The lithium geologic band running through the South

Exxon Mobil, a new player in the hunt for U.S. lithium, is planning to build one of the world’s largest lithium processing facilities in southern Arkansas, with a capacity to produce 75,000 to 100,000 metric tons of lithium a year. At that scale, it would equate to about 15% of all finished lithium produced globally. The prospect could have the equivalent of 4 million tons of lithium carbonate equivalent, enough to power 50 million EVs.

To push the project forward, Exxon and two of its announced competitors will have to profitably scale up the technology used to siphon lithium from brine, which has been an elusive goal across the industry. This particular geologic region, called the Smackover Formation, runs from Texas to Florida. It is rich with saltwater brine, which once bedeviled companies drilling for oil. That brine also contains small amounts of lithium, and the companies are now optimistic they can scale up technologies to extract it. Drilling for lithium with this extraction method is cleaner than traditional mining, and faces fewer regulatory risks.

The mining is expensive, though, costing about $1.5 billion to build 25,000 metric tons of capacity. The three proposed projects would create 6,000 jobs– and require 1,600 trucks by 2028.

Exxon believes it can leverage its engineering prowess to become a low-cost domestic supplier of lithium, and has had discussions with battery and EV manufacturers. The company would also benefit from U.S. green-energy subsidies, which allows for tax credits of 10% of the cost of producing lithium. The firm, generally bullish about the future of oil and natural gas, is also preparing for a future less dependent on gasoline. Last year, Exxon projected demand for auto internal combustion engine fuels could peak by 2025, while EVs, hybrids and vehicles powered by fuel cells could grow to more than 50% of new car sales by 2050.

Classroom discussion questions:

Why is lithium an important EV supply chain component?
What is Exxon’s strategy?

OM in the News: Demanding a Bigger Piece of the EV Pie

Electric vehicles require six times the mineral inputs of conventional cars, and it is estimated that mineral demand for use in EVs and battery storage could grow 30 times by 2040, reports The Wall Street Journal (July 3, 2023).

Across the developing world, mineral-rich nations are demanding a bigger piece of the EV pie, saying they are moving to end the era of extract and export. Countries with vast deposits of the ingredients essential to making EVs are digging in and trying to take advantage of the boom.

In parts of Latin America, Africa and Southeast Asia, governments are restricting the export of raw minerals, demanding that miners build processing plants locally and looking to tighten control over foreign-operated mines. The steps are sometimes described as resource nationalism, and their increasing popularity is reshaping supply chains that underpin the shift toward cleaner forms of energy.

Lithium production in Chile, where greater state control of the resource has become a priority.

Guinea, a major African bauxite producer, has imposed a minimum export price and urged companies to build local refineries. Namibia just banned the export of unprocessed lithium and other critical minerals, including cobalt, manganese and graphite. Indonesia banned the export of unprocessed nickel, pushing foreign companies to build billion-dollar facilities in the country that are turning ore into higher-value materials for EV batteries. Zimbabwe is doing the same with lithium. Chile and Mexico are seeking greater state control over their countries’ lithium reserves. These ore-rich countries are looking to move up the value chain instead of simply providing the primary inputs or commodities.

State actions aimed at that goal bring risks for the transition, potentially deterring investment in new mines needed to keep up supply. They could also raise the cost of critical materials, increase regulatory burdens for companies and lead to shortages in the future. “It’s got to be an all-around negative factor for the energy transition,” said one expert. Indonesia, a mineral powerhouse, infuriated trade partners with its 2020 ban on the export of raw nickel, but it worked. Companies from across Asia and the U.S. are pouring investments into building nickel-processing plants in the country, making Indonesia a significant player in the EV supply chain.

Classroom discussion questions:

How does resource nationalism relate to the issue of core competencies that we discuss in Chapter 2?
What keeps the U.S. and other developed nations from mining their own minerals?

OM in the News: The EV Battery Dilemma

Traffic backs up at the Bay Bridge. California is set to implement a plan to prohibit the sale of new gasoline-powered cars by 2035.

Recent U.S. regulations are pumping billions into battery manufacturing and incentives for EV purchases. The E.U., and several U.S. states, have passed bans on gas-powered vehicles starting in 2035. This transition will require lots and lots of batteries, reports Grand View Research (June, 2023).

When a lithium-ion battery, which consists of thousands of cells filled with cobalt, nickel and manganese, comes to the end of its life, its green benefits fade. If it ends up in a landfill, its cells can set afire or leach dangerous chemicals that can contaminate water supplies and ecosystems. The thin metal exterior of a battery will decompose within 100 years, exposing the toxic heavy metals inside, which will never decompose.

But recycling these batteries can be hazardous. If they are not opened carefully, they can explode, short-circuit, and let off toxic fumes. In the coming decades, tens of millions of EV batteries will reach their end-of-life. (Some predict there will be 150 million EVs on the road by 2030. Last year there were fewer than 12 million). Current EV batteries “are really not designed to be recycled,” says one industry expert.

The E.U. and China are setting new rules for some level of battery reuse. But it will not be easy to meet the new regulations. Most recycling processes produce heavy waste and emit greenhouse gases, and very little recycling goes on today. (Recycling rates in the E.U. and the U.S. are less than 5%). Most of the batteries that do get recycled undergo a high-temperature melting-and-extraction process. Those operations, which are carried out in large commercial facilities are energy intensive. The plants are also costly to build and operate, and require sophisticated equipment to treat harmful emissions generated by the process. And despite the high costs, these plants don’t recover all valuable battery materials.

Battery-swapping is one innovative business strategy proposed in OR/MS Today (June 20, 2023). A battery swapping infrastructure station network could provide a service for EV owners to “refuel” their vehicles. Replaced batteries would subsequently be recharged and exchanged for other arriving EVs needing a battery swap. One significant challenge impeding this concept was the need for a universal battery standard that multiple automakers could share. The battery packs needed to have identical dimensions and shapes to be compatible. Tesla tried the concept in 2013, but gave up on it a few years later.

Classroom discussion questions:

Why is battery swapping so difficult?
Why is recycling EV batteries so complex?

OM in the News: The “Nickel Pickle” and Other Electric Vehicle Tales

The Wall Street Journal (June 5, 2023) led with a front page article called the “Nickel Pickle” and then went on with two more stories about EV headwinds. Let’s summarize: To make batteries for EVs, companies need to mine and refine large amounts of nickel. The process of getting the mineral out of the ground and turning it into battery-ready substances is particularly environmentally unfriendly. Reaching the nickel means cutting down swaths of rainforest. Refining it is a carbon-intensive process that produces waste slurry that’s hard to dispose of.

Mining and refining nickel is a dirty business

The nickel issue reflects a larger contradiction within the EV industry: Though EVs are designed to be less damaging to the environment in the long term than conventional cars, the process of building them carries substantial environmental harm. One Indonesian miner, for example, said that rainforest clearing caused greenhouse gas emissions equivalent to 56,000 tons of carbon-dioxide. That’s equal to driving 12,000 conventional cars for a year.

Tesla adds that EVs cause more emissions during the manufacturing phase than conventional vehicles, due in part to the process of extracting and refining minerals. Nickel is responsible for 1/3 of the carbon emissions generated from making a battery cell.

The second piece states that battery-powered EVs “are not the only way to achieve the world’s carbon neutrality goals.” Toyota is promoting its hybrids and plug-in hybrids as alternatives to battery-powered EVs. Plug-in hybrids contain an engine that can kick in when the battery runs low and are cheaper than EVs. That firm has pledged to make all its vehicles carbon neutral by 2050.

Toyota’s CEO made news when he claimed that a “silent majority” in the auto industry “is wondering whether EVs are really OK to have as a single option.” He added that “the amount of raw materials in one long-range battery EV could instead be used to make 6 plug-in hybrid electric vehicles or 90 hybrid electric vehicles.” For that anti-EV comment, progressive investors and government pension funds have moved to oust him.

The 3rd article reports that VW “is searching the world, from Canada to Indonesia, for supplies to make the batteries in EVs it sells less dependent on Chinese components,” especially nickel. China dominates global production of refined battery materials used in EV batteries. “Today we are 100% dependent on China,” says a VW exec.

Classroom discussion questions:

Why is nickel a supply chain problem?
Why is the Toyota position controversial?