Shortage of raw materials: SUV trend intensifies scarcity of rare earths
Off-road vehicle industry boom exacerbates raw material shortage problem for critical minerals
Marcus Stuart (MS)May 8, 2025
The increasing demand for SUVs and electric cars is having an impact on the shortage of rare earths and other important raw materials. While the Wuling Hongguang Mini EV, a small e-car, enjoys great popularity in China, such small cars are produced less and less in Germany. Instead, the vehicles are getting bigger and bigger, which increases the demand for cobalt, nickel and rare earths. These raw materials are expensive and their extraction pollutes the environment, often using child labor.
Cobalt, nickel and rare earths are crucial for the production of e-car batteries. The success of the switch from the internal combustion engine to electric drives stands or falls on this. But the trend toward ever larger cars, especially SUVs, is exacerbating the shortage of these raw materials. Experts warn that the demand for critical raw materials for electric vehicles will increase significantly by 2050.
Batteries with high cobalt content are particularly sought after because of their performance. However, the supply chain for cobalt is problematic, with the largest deposits located in the Democratic Republic of Congo, where children often work in the mines. Despite industry efforts to reduce the amount of cobalt and increase the amount of nickel, industrial production has not yet reached the point where there are eight grams of nickel for every one gram of cobalt and one gram of manganese.
In addition to cobalt, other raw materials are also important for e-mobility. Most of them come from China, such as magnesium, which is used in the production of aluminum. As European cars are getting bigger, especially in the SUV segment, there is an "SUV-ization" of electromobility. This trend is inefficient and causes higher material consumption.
Automakers are driven by profit maximization and are going for larger cars because they are more profitable. German manufacturers may have missed the early entry into battery production and are currently unable to produce mass-market, low-cost small electric cars. The automotive industry, on the other hand, argues that it is meeting consumer demand and that larger cars also address safety concerns, such as larger crumple zones.
To reduce the need for raw materials, about 90 percent of the cobalt used will be recycled starting in 2026. Recycling of batteries is also seen as important, but can only make a limited contribution with strong growth in e-mobility. Work is also underway to develop batteries with more readily available materials.
The trend toward ever-larger cars and the shortage of rare earths pose challenges for e-mobility. To limit environmental impacts, it is necessary to increase the share of smaller e-cars. But the SUV trend is reinforced by the wrong incentives, such as company car regulations. A traffic turnaround should therefore take people's individual needs into account and consider alternative solutions such as the expansion of public transport.
