EV battery mineral supply shortage intensifies as mining and manufacturing stocks fall in tandem
As global EV transition accelerates, critical mineral demand surges, but raw material price volatility from supply constraints is pressuring industry profitability.
Why all three companies fell more than 10% in one month
Rio Tinto (RIO) closed at $84.14 as of October 22, 2026, down 11.66% over one month; Vale (VALE) declined 11.72% to $12.20. The joint decline of these two major mining companies, the largest suppliers of critical minerals for EV batteries, reflects supply-demand imbalance in raw material markets. BYD (BYDDY, BYD Company Limited) fell 13.54% to $8.75, showing that battery makers are no exception. On a three-month basis, the situation is more severe: Vale down 15.16% and BYD down 21.31%.
Critical minerals such as cobalt, nickel, and lithium form the heart of EV batteries. As battery production increases regionally, raw material demand grows exponentially, but supply cannot keep pace because mine development takes years. This mismatch began appearing in 2024 and has become structurally evident since 2026.
Why battery minerals are the bottleneck now: four factors
1. Rapid EV sales growth and battery demand surge: EV adoption in China, Europe, and the US has accelerated, driving significant battery demand growth. A single EV battery contains 6–8 kg of nickel, 0.5–1 kg of cobalt, and 1–1.5 kg of lithium. To supply the absolute volume of raw materials needed when 20 million EVs or more are sold annually, mining infrastructure must be at least three times larger than today.
2. Geographic concentration and geopolitical risk: The Democratic Republic of Congo and Indonesia produce a significant portion of cobalt and nickel. Changes in these countries’ political and environmental regulations shake global supply chains. In fact, Congo’s increase in mining export taxes (2024) and Indonesia’s export restrictions tightening (2025) raised international mineral prices sharply.
3. Extended mine development and insufficient investment: Mine development from exploration to permitting to construction takes 7–10 years on average. Major mining companies’ new capital expenditure has declined over the past three years, and project delays and cancellations due to deteriorating profitability have increased. Rio Tinto’s net margin of 19.6% is healthy, but Vale’s is only 4.8% and BYD’s 3.8%, reflecting severe margin pressure in the raw materials sector.
4. Battery technology competition and delayed material substitution: The chemical transition (sulfate, iron phosphate batteries, etc.) is progressing slowly. Existing battery technology still relies on nickel-cobalt-lithium, and systematic alternatives are not expected to reach commercial scale until after 2028. Until then, supply shortages of these three minerals are unavoidable.
Structural strengths and weaknesses: asymmetry between miners and manufacturers
Structural strengths of major miners: Rio Tinto and Vale are oligopolists in mine development. When prices rise, they can increase production to capture excess profits, and new projects are accessible only to majors with large capital and technical expertise. Rio Tinto’s revenue growth rate of 15.5% reflects this structural advantage.
Weaknesses of battery makers: BYD’s growth momentum has stalled. Revenue growth contracted 3.2%, and net margin remained at 3.8%. When raw material prices rise, battery production costs increase, and if that increase cannot be passed to finished vehicle prices, margins must be cut. EV makers lack pricing power like miners do.
Conclusion
While EV transition is an inevitable direction, structural supply shortages of battery minerals are likely to persist in the near to medium term (three years). Miners can maintain profitability through raw material oligopoly, but EV manufacturers and suppliers face volatility while absorbing cost increases. For raw material markets to stabilize, new mines must come fully online, and until then supply scarcity and price volatility will dominate industry cycles.
This article is for information only and is not investment advice.