Ford Motor Company CEO Jim Farley believes battery supply chains could stand in the way of companies wanting to go all-electric.

In an interview with Yahoo Finance Live from Ford's new BlueOval City manufacturing complex, Farley talked about the challenges of sourcing enough battery materials and processing them to build batteries for an increased electric vehicle production. 

"First of all, batteries are the constraint here, it won't be the manufacturing site behind me. In the lithium-ion batteries that we use, both lithium and nickel are really the key constraining commodities. We normally get those from all over the world – South America, Africa, Indonesia, Southeast Asia. We want to localize that in North America, not just the mining but the processing of the materials."

The executive pointed out that most raw metals mined in the United States get sent to China to be processed, which the US actively trying to counter through grants instated by the Inflation Reduction Act and other investments.

"The big change is going to be onshore all that capability of processing but also mining back in the US. It will be a huge job, just like it has for semiconductors," Farley noted.

After a raw material is extracted from the earth, it is sent to processors to purify the mineral, which is then shipped to producers who manufacture EV batteries. Overall, raw minerals can travel as many as 50,000 miles before reaching a battery factory.

Gallery: Ford F-150 Lightning Production

China dominates the market with more than 70 percent of global EV battery production capacity within its borders, but its strength comes mainly from its refining capacity. The country is also the largest producer of graphite, one key mineral used in lithium-ion batteries.

As demand for electric cars and trucks increases so too will demand for the precious minerals used in batteries. As a result, the global supply chains that extract and process minerals will be put to the test. 

The US has outlined five minerals it deems "critical" to the EV transition that have supply chains at risk: lithium, cobalt, manganese, nickel, and graphite. Lawmakers and executives from the mining industry have already raised alarms about mineral supply.

Lithium, for example, is a key component in lithium-ion batteries, the most dominant type of battery used in the EV industry and the kind that Ford uses. The average electric car battery uses about 8-10 kilograms of lithium. 

Keith Phillips, CEO of Piedmont Lithium, told Yahoo Finance last year that there will be "a real crunch to get the material" as there's not enough of it in the world to turn that much production by 2035.

Demand for lithium-ion batteries is expected to explode by more than 500 percent between 2020 and 2030. There would have to be an estimated 300 million electric cars on the road in 2030 to stay on track with benchmark net-zero goals.

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