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Circular Economy – How It Affects the EV Revolution

Circular Economy – How It Affects the EV Revolution

The circular economy is one of the most talked-about innovations in sustainability. It’s a system that aims to reduce resource depletion, create economic opportunities and encourage fairness for all stakeholders involved. As a result, the circular economy is a hot topic in the automotive industry, and it’s not just because people are wondering what Tesla has up its sleeve. In today’s world, where technology progresses at breakneck speed, it seems like everyone has their eye on Elon Musk’s Tesla company in Silicon Valley who recently unveiled some interesting new products – including one with autonomous driving capabilities. In reality, though, we should be paying attention to what car manufacturers are up to; they’re getting ready for tomorrow by putting design frameworks that will allow them to produce cars of the future that are lighter, more efficient, and cleaner.

Shortage Of Nonrenewable Resources — Effects On EVs

The shortage of raw materials, increase in the price of lithium, cobalt, and so on. This affects the practical application for electric cars, like their range or battery life. For example, a Tesla Model S with an 80 kWh battery will take around 20 minutes to charge from flat if using 50kW chargers – however, this could be tripled by using 150 kW fast-charging stations! The higher speed means they can achieve 255 miles per hour while only taking 30 minutes to recharge fully.

Another issue is recycling these metals as demand increases; today’s infrastructure has barely changed since it was built during World War II! Recycling rates are below five percent for nickel and aluminum and just one percent for copper

Circular Economy – How It Affects the EV Revolution

With all this talk about how electric vehicles will shape our future mobility landscape, some important trends can get overlooked, like how a circular economy approach affects nonrenewables or raw materials 

For example, one of the most beneficial aspects of a circular economy is that it reduces energy use by up to 40%, which means less CO emissions. Lithium batteries are currently crucial in EV production – especially Tesla’s Gigafactory in Nevada with its vast lithium-ion battery cells for their vehicles. But there are also other nonrenewable raw materials required, such as cobalt and nickel.

The problem?

These resources will eventually run out when we don’t have any new deposits discovered or mined anymore because they’ve already been found. And this has a major impact on EVs given how much these components rely on them: 60% of global cobalt supply can be attributed to electric vehicle manufacturing; Nickel is used in the battery’s cathode; 

It is estimated that if demand for EVs continues to increase, there will be a shortage of lithium by 2020. And with it come an even more dramatic price rise. This means we need to adopt a circular economy as a must-have direction – not just because it has environmental and economic benefits and so future generations don’t have to suffer from resource depletion or extreme prices due to peak oil.

Circular Economy: Not Just A “Nice To Have”

There are many positive aspects of circular economy: reducing energy use by up to 50%, reducing carbon emission up to 90%, and reducing costs by at least 20%. 

The negative side of the circular economy is that there are not enough resources on Earth, especially when we talk about raw materials such as lithium. Lithium production has been growing exponentially since the 1980s; however, Tesla’s Gigafactory requires so much more than what current mines can produce because they only have 16 years’ worth of reserves left (and even these will be depleted if demand increases).

This means we need to adopt a circular economy as a must-have direction –

not just because it has environmental and economic benefits and so future generations don’t have to suffer from resource depletion or extreme prices due to peak oil. 

For instance, EV’s need to be charged with electricity which in turn needs to be generated from power plants or with renewable energy sources such as solar panels and wind turbines. Now that we’ve looked at these trends, let’s explore what this means for EVs industry-wise: 

First of all, electric cars will probably become cheaper due to less dependency on expensive raw materials (especially lithium). The battery prices are also likely to decrease because there won’t be a shortage of key components like cobalt and nickel, so manufacturers won’t have incentives anymore because of increasing demand and increasing supply competition since they’re using more common metals than before. Furthermore, there will be less pressure on the EV battery industry to innovate to produce lighter, stronger, and cheaper batteries. 

As investment increases in sustainable energy projects, more environmentally friendly materials can be used for making cells instead of cobalt or graphite, which are both mined from nonrenewable sources; eventually, these renewable resources will run out if we don’t start using them sparingly now!

Here Are Some Examples Of Circular Economy:

  • Starting with companies like Tesla, who have already pioneered their way of utilizing solar power and idea for using natural energy sources such as wind and hydroelectric generators have led them on track to being more circular from day one – they will never use up scarce nonrenewable resources that future generations could use. 
  • Other companies such as Nissan have predicted that their raw materials will come to an end sooner, so they too have started early with a circular strategy by working closely with suppliers for sustainable plans. Nissan has begun developing new battery technology that is recyclable.
  • The use of biofuels and other renewable resources to produce electricity that powers EVs instead of coal plants
  • Ditching old model vehicles for an all-new EV generation – this includes refurbishing or recycling parts from older cars (for example, Tesla offers a trade-in program where they take your car’s battery when you buy one)


The consequences for various industries when certain raw materials (nonrenewables) will come to their end are:

Automotive Industry:

Resourcing and production costs rise, as well as prices on cars. We need more EVs so that demand doesn’t exceed supply too soon! The costs of producing EV batteries with lithium or cobalt are prohibitively high for many manufacturers. The issue will be complicated because it is hard to guarantee these minerals will be available in the future at an affordable price, leading carmakers like Tesla to limit production output due to their dependence on battery technology.

Pharmaceutical Industry/Chemical Manufacturing/Oil & Gas Production:

The cost of creating life-saving drugs increases dramatically because these companies rely heavily on nonrenewable resources such as petroleum products and metals like cobalt. Increased resource scarcity also leads to spikes in fossil fuel extraction, which releases greenhouse gases into the atmosphere, thus worsening climate change.

Construction/Building Materials:

Raw materials like steel, cement, and aluminum become more costly. This causes prices to increase on all construction projects leading to higher costs for end-users of building products. In addition, the material requirements are also pushing up development times, hindering our ability to respond quickly enough with adequate housing supply in the face of the need.

Manufacturing Industry:

The higher resource prices will lead to an increased dependence on imports, driving up production costs and global trade imbalances as well as increasing the risk for companies entering international markets with high import tariffs, also known as “tariffs.” 

Electronics Industry:

Decreased availability of raw materials leads to a decrease in supply, resulting in price increases, shortages, and ultimately less innovation from manufacturers who are unable to invest in new technologies because they lack sufficient resources needed for research & development (R&D). This is projected by some analysts that commodity-driven industries such as smartphones may shift away from using metals like copper or nickel due to their scarcity. 


A circular economy will become a key component of tomorrow’s EV development to ensure that future supplies are sustainable. Fewer resources mean less impactful EVs, which is unacceptable if we want to meet the growing global demand for transportation. The scarcity of natural resources is one factor that will affect how the EV industry develops in the future. As we rely on more and more items, such as lithium and cobalt, which are finite resources, manufacturers need to be mindful of using these materials in their products with a circular approach. When supply does run out, there are still substitutes available, or technologies can adapt appropriately. Now It may not seem like an issue to you, but if you consider what could happen by 2040 – obtaining key minerals from Earth becomes very difficult, leading to shortages; prices go up, putting the cost of EV’s to a level that consumers can’t afford them.

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