| Workers assemble cars on the line at Tesla's factory in Fremont, Calif. The automaker has tried to reduce the amount of cobalt needed in its batteries. Source: David Butow/Corbis News via Getty Images. |
Automakers are deploying alternative battery chemistries to avert supply disruption as rising demand for electric vehicles taxes the world's capacity to mine the minerals critical to the clean energy transition.
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Materials such as lithium, cobalt and nickel are essential to the lithium-ion battery chemistry typically found in EVs, but they are also limited in available supply, and some are fraught with ethical and environmental sourcing concerns.
Global demand for passenger plug-in EVs totaled 280 GWh in 2021, increasing 88.4% to 528 GWh by the end of 2022, according to an April research report from S&P Global Commodity Insights. That figure is expected to grow by another 148.7% to 1,314 GWh by 2025. As demand swells for EVs, automobile manufacturers and battery-makers are locking in the supply of key materials and looking for ways to avoid using some of them entirely.
Automakers and battery-makers more broadly have expanded the use of iron-lithium batteries, which dispense with cobalt and nickel while sacrificing driving range, and battery-makers in China have announced that they are close to commercial production of sodium batteries developed in the face of sky-high lithium prices in 2021 and 2022. Companies are also examining ways to reduce the cobalt content in mainstream nickel-manganese-cobalt (NMC) battery chemistries, according to automakers and battery supply chain industry observers.
"There's a huge amount of interest in exploring how can you diversify battery chemistries in a way which improves opportunities for accessing those specific minerals within the battery supply chain," said Reed Blakemore, deputy director of the nonprofit Atlantic Council Global Energy Center. "It's not the solution, but part of an ecosystem of solutions necessary to ensure you have resilient battery supply chains."
The hunt for alternative battery technologies is driven by a tight supply of raw materials, putting pressure on costs, along with a desire among some governments to lessen trade dependence on China, said Henrique Ribeiro, principal analyst of batteries and energy storage at Commodity Insights. China hosts much of the world's battery metals refineries as well as manufacturers of cells and other components.
Limited refining capacity is only one of the challenges driving a shift in battery chemistries. Simply finding the necessary chemicals can be a challenge. For example, cobalt is in relatively short supply, with about 48% of global cobalt reserves in the Democratic Republic of the Congo, according to the US Geological Survey.
Buyers are also pressuring battery material suppliers to ensure that materials are not connected to poor environmental practices or human rights issues. Responding to a suggestion in May that Tesla Inc. should audit its supply chain, CEO Elon Musk emphasized that thanks to iron-based chemistries, some of the EV maker's batteries use little to no cobalt, depending on the model. He also was adamant that the company is diligent about ethical sourcing.
"Even for the small amount of cobalt that we do use, we will make sure six ways to Sunday that no child labor is being exploited," Musk assured investors during the May 16 meeting.
The DRC hosts 12.3 million metric tons of cobalt in reserves and resources, more than the next nine countries combined, according to S&P Global Market Intelligence data. China, meanwhile, has been working to secure supplies of the base metal.
"Even though Chinese companies have secured a lot of overseas supplies, cobalt demand will surge along with EV development, and cobalt supplies won't be sufficient to meet that demand," said Mo Ke, the RealLi Research founder, CEO and chief analyst. "Battery-makers have to eliminate cobalt, just like they have to get rid of platinum and palladium for hydrogen fuel cells."
Lithium-iron-phosphate batteries
Energy density has long been top of mind for EV makers, but they are also focused on lowering costs because of commodity prices, supply chain constraints resulting from the Russia-Ukraine war, and other factors.
"There's a lot of [research and development] that goes into the evolution of battery technologies," said Evelina Stoikou, an energy storage associate at BloombergNEF. "But market dynamics, whether raw material prices or black swan events, can really pivot where technology is going."
One of the most promising alternative chemistries for near-term deployment is the lithium-iron-phosphate (LFP) battery. LFP batteries do not need nickel or cobalt and can be built at a lower cost than other battery chemistries. The average cost of a battery using an LFP cathode was $13.10/kWh as of May 5, compared to $31.30/kWh for an NMC622 cathode using the more traditional NMC battery chemistry, according to Alice Yu, a senior mining analyst with Commodity Insights. However, the trade-off for the lower cost is a shorter driving range between charges.
"LFPs are going to dominate for the foreseeable future, but there are emerging technologies and chemistries that are going to be experimented with and commercialized in the next three or four or five years that I think will try to displace LFP batteries," said Tu Le, managing director for consulting group Sino Auto Insights. "It's going to take time for capacity in Europe and the United States to come online. Then it'll still be difficult to compete on price versus Chinese imported LFP cells."
So far, US and European automakers have primarily used nickel-based battery chemistries because they have a relatively high energy density compared to LFP batteries. Stoikou said it would be difficult for other countries to compete with China on LFP deployment, though US automakers are trying. Tesla outlined plans in late 2021 to shift its standard-range EVs to a battery using an LFP cathode, and Ford Motor Co. is building a $3.5 billion LFP factory in Michigan.
Chinese automakers also use nickel-based chemistries, but the country's LFP deployment has increased in the past two years. The increase has mainly been due to growing demand for low-cost passenger vehicles, such as ride-hailing EVs, as Beijing phases out EV subsidies.
As a result, China's LFP output has surpassed conventional NMC batteries since May 2021, and LFP batteries accounted for 64.1% of the country's total battery output in the first four months of 2023, data from the China Automotive Battery Innovation Alliance shows. Moreover, LFPs gained momentum in the ex-China markets after various LFP-related patents expired in 2022.
Blakemore said it is "really, really impressive" how quickly LFP chemistries have already taken hold in the market.
"It's in the here and now," Blakemore said. "We're seeing rapid deployment. I wouldn't be terribly surprised if the rate at which [other battery chemistries] reach commercial scale and enter the US market happens much quicker than we might have expected for technologies that are seemingly over the horizon."
Sodium-ion batteries
The price of lithium took off in mid-2021, and the price of lithium carbonate CIF North Asia rose as high as $78,200 per metric ton as of Nov. 29, 2022, according to the Platts assessment from Commodity Insights. The price fell to $31,000/t as of May 10 but remained three times higher than two years prior as of June 5.
If prices rebound due to expected lithium shortages, carmakers could turn to sodium-ion batteries. Compared to lithium, sodium is abundantly available and more readily mined, and several China-based companies have made progress in rolling out vehicles with sodium-ion batteries. More than 100 GWh of sodium-ion battery manufacturing capacity is operating or announced, and almost all of the plants are in China, according to an April 26 outlook from the International Energy Agency.
"Sodium-ion, which is one of the most advanced alternatives, also has lower energy density per volume, meaning the batteries need to be bigger, which is a disadvantage for the use in applications where the battery size is critical," Commodity Insights' Ribeiro said.
As with the LFP batteries before them, car buyers in China might be more interested in a shorter-range, less expensive vehicle than those in the US or Europe.
"China doesn't have the same consumer demands around battery output that you see in the United States," Blakemore said. "So you can pursue a wider array of batteries that perhaps are cheaper to produce but don't have the same range capacity that a long-distance car culture like the United States might demand."
Wang Yu, chairman of China-based battery developer Farasis Energy (Gan Zhou) Co. Ltd., said in March that the company would launch its first-generation sodium-ion battery with an energy density of 160 Wh/kg in 2023. The executive noted that automakers and battery manufacturers have been hit hard by a recent surge in cobalt and lithium prices.
"We have to reduce reliance on scarce resources by developing lithium- and cobalt-free batteries," Wang said.
Contemporary Amperex Technology Co. Ltd. (CATL) outlined plans in mid-2021 to mass-produce sodium-ion batteries in 2023. Chery Automobile Co. Ltd. will be the first automaker to equip CATL's sodium-ion batteries, the two companies said in April. BYD Company Ltd. is also reportedly planning to mass-produce sodium-ion batteries in 2023. CATL and BYD Co. did not respond to requests for comment.
CATL is also partnering with Ford on the LFP cell plant in Michigan, which is one of several new iron-based battery and material plants planned in the US following the rollout of incentives in the Inflation Reduction Act of 2022 and the bipartisan infrastructure law of 2021.
"On paper, sodium-ion batteries will be cheaper than lithium batteries, and, of course, they have a lower energy density as well," RealLi Research's Mo said. "Theoretically, sodium-ion batteries may thus locate a market that places a greater emphasis on cost and displace a small portion of the lithium-ion batteries. "
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