The EV boom is accelerating a copper crunch

UPSC Syllabus Topic: GS Paper 3 – Science and Technology

Introduction

The rapid global shift toward electric vehicles is increasing copper demand at an unprecedented scale. Copper is essential for electrification and forms the backbone of EV batteries, motors, wiring systems, charging infrastructure, and power grids. As EV adoption expands rapidly, copper demand is rising much faster than supply. Years of mining underinvestment, declining ore quality, and long project timelines are creating a structural shortage that may affect EV affordability, energy transition targets, and global trade dynamics.

Importance of Copper in the EV Transition

1. Central role in EV systems: Copper is required in EV batteries, electric motors, inverters, wiring harnesses, charging stations, and supporting power grids.
2. Higher copper intensity in EVs: Electric vehicles use four to five times more copper than internal combustion engine vehicles, making electrification highly copper-intensive.
3. No effective substitute available: There is currently no viable large-scale alternative material that can replace copper’s conductivity and efficiency.
4. Rapid expansion of EV sales: Global EV sales increased from about 0.55 million units in 2015 to nearly 20 million units by 2025.
5. Sharp rise in copper consumption: Copper demand linked to EVs rose from around 27.5 thousand tonnes in 2015 to over 1.28 million tonnes by 2025.
6. Strong demand linkage: Between 2016 and 2024, copper demand elasticity mostly remained above 1.0, showing demand grew faster than EV sales.
7. Peak copper usage phase: In 2019, elasticity reached 1.76 due to larger battery packs, increased power electronics, and rapid charging infrastructure expansion.
8. Efficiency gains insufficient: Although elasticity may fall to around 0.90 by 2025, total copper demand will continue rising due to large EV volumes.

Emerging Global Copper Supply Constraints

1. Decades of underinvestment: Copper mining received limited investment for many years, restricting the industry’s ability to expand supply quickly.
2. Declining ore quality: Existing mines are producing lower-grade ore, which reduces output efficiency and increases production costs.
3. Long project development cycle: New copper mines require 10–15 years from discovery to commercial production, delaying supply response.
4. Environmental and regulatory barriers: Mining expansion faces strong environmental opposition and regulatory delays in Chile, Peru, and the United States.
5. Stagnation of global supply growth: These factors together have caused global copper supply growth to plateau despite rising demand.
6. Transition from surplus to deficit: In 2024, global copper supply exceeded demand by about 0.3 million tonnes, but this balance is reversing.
7. Large projected supply gap: By 2026, demand is expected to reach nearly 30 million tonnes, while supply may remain near 28 million tonnes.
8. Widening long-term shortage: The deficit could increase to 4.5 million tonnes by 2028 and almost 8 million tonnes by 2030.
9. Scale of the shortfall: The projected gap equals the combined output of the world’s ten largest copper mines.
10. Rising cost pressures: Copper shortages may increase EV production costs and slow adoption.
11. Infrastructure development risks: Limited copper availability could delay charging infrastructure and power grid expansion.
12. Threat to climate transition: Copper scarcity may become a major bottleneck for global decarbonisation efforts.

Geopolitical and Market Implications

1. China’s dominant demand position:

• China’s EV-related copper demand rose from about 78,000 tonnes in 2020 to nearly 678,000 tonnes in 2024.
• By 2025, China is expected to account for nearly 60% of global EV-based copper consumption.
• China controls over 70% of global battery cell manufacturing and maintains deeply integrated supply chains.

2. Regional imbalance in consumption: By 2025, EV-related copper demand is expected to reach around 210,000 tonnes in the European Union and 114,000 tonnes in the United States.
3. Limited role of India: India’s EV-based copper demand remains modest at about 7,200 tonnes.
4. Strategic leverage risks: High concentration of demand and processing gives China pricing power and leverage over copper-rich regions.
5. Copper as a strategic resource: As electrification expands, access to copper is becoming as important as battery technology itself

Way Forward

1. Increase mining investment: Large-scale investment is needed to develop new copper projects and expand existing ones.
2. Accelerate recycling capacity: Copper recycling must grow rapidly to reduce pressure on primary mining supply.
3. Improve material efficiency: Technological innovation should focus on lowering copper intensity without compromising performance.
4. Strengthen supply diversification: Countries must secure long-term contracts and diversify sourcing regions.
5. Align mineral and climate planning: Energy transition strategies must integrate resource availability with decarbonisation goals.

Conclusion

The global EV transition is driving copper demand beyond current supply limits. Rapid sales growth, stagnant mining output, and rising geopolitical competition are creating a structural copper crunch. Without urgent expansion of supply, recycling, and strategic planning, electrification goals may slow. The pace of the energy transition will depend not only on technology, but on copper availability.

Question for practice:

Examine how the rapid expansion of electric vehicles is intensifying global copper demand, creating supply constraints and reshaping market and geopolitical dynamics.

Source: The Hindu