Doing so will also require striking a balance between remaining profitable while competing on prices. Mining and refining will need to continue growing quickly to meet future demand, to avoid supply chain bottlenecks and make supply chains more resilient to potential disruptions. Compared to just a few years earlier, overcapacity means that many companies are now struggling to stay afloat (see later section on trends in the EV industry). While low critical mineral prices help bring battery costs down, they also imply lower cash flows and narrower margins for mining companies. In 2023, the supply of cobalt and nickel exceeded demand by 6.5% and 8%, and supply of lithium by over 10%, thereby bringing down critical mineral prices and battery costs. High levels of investment in mining and refining in the past 5 years have ensured that global supply can comfortably meet demand today, not only for EVs but also in historical markets including portable electronics, ceramics, metals and alloys. Battery demand for nickel stood at almost 370 kt in 2023, up nearly 30% compared to 2022. To a lesser extent, battery demand growth contributes to increasing total demand for nickel, accounting for over 10% of total nickel demand. Battery demand for lithium stood at around 140 kt in 2023, 85% of total lithium demand and up more than 30% compared to 2022 for cobalt, demand for batteries was up 15% at 150 kt, 70% of the total.

Rising EV battery demand is the greatest contributor to increasing demand for critical metals like lithium. More batteries means extracting and refining greater quantities of critical raw materials, particularly lithium, cobalt and nickel

Negligible EREV sales are recorded in other regions. In 2023, EREVs accounted for 25% of PHEV sales in China, up from about 15% in 2021-2022. With an ICE on board, EREVs can reach ranges of around 1 000 km when needed. EREVs typically have a battery size about twice that of a PHEV, enabling a real-world electric range of around 150 km compared to 65 km for traditional PHEVs. In recent years, Chinese carmakers have also been marketing more extended-range EVs (EREVs), which use an electric motor as their unique powertrain but have a combustion engine that can be used to recharge the battery when needed. PHEV batteries are smaller than those used in BEVs, thereby contributing less to increasing battery demand. In China, PHEVs accounted for about one-third of total electric car sales in 2023 and 18% of battery demand, up from one-quarter of total sales in 2022 and 17% of sales in 2021. In the rest of the world, battery demand growth jumped to more than 70% in 2023 compared to 2022, as a result of increasing EV sales. Nevertheless, the United States remains the smallest market of the three, with around 100 GWh in 2023, compared to 185 GWh in Europe and 415 GWh in China. The United States and Europe experienced the fastest growth among major EV markets, reaching more than 40% year-on-year, closely followed by China at about 35%. Globally, 95% of the growth in battery demand related to EVs was a result of higher EV sales, while about 5% came from larger average battery size due to the increasing share of SUVs within electric car sales. Electric cars account for 95% of this growth. Demand for EV batteries reached more than 750 GWh in 2023, up 40% relative to 2022, though the annual growth rate slowed slightly compared to in 2021‑2022. The growth in EV sales is pushing up demand for batteries, continuing the upward trend of recent years. Increasing EV sales continue driving up global battery demand, with fastest growth in 2023 in the United States and Europe

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