Batteries: the dispute for the car market and energy generation – 08/14/2023 – Market

Lithium-ion batteries have already changed the world, putting smartphones, laptops and wireless headphones in the hands of billions of people. Now they are triggering another revolution.

The technology of choice in both electric cars and the fledgling electricity storage industry, cells will be a vital pillar in the global transition to a carbon-free economy.

As demand increases, implementation promises big rewards. Global revenues from lithium-ion batteries will grow to US$700 billion (about R$3.4 trillion) per year by 2035, according to consultancy Benchmark Mineral Intelligence, at which time US$730 billion (about of BRL 3.6 trillion) to invest in battery factories, mines and processing facilities, with the aim of meeting the need not only for lithium, but also for other ingredients, including nickel and cobalt.

“This will be a race to see who can develop the most advanced technologies in the world,” said Glen Merfeld, chief technology officer of Albemarle, the world’s largest lithium company.

With two main strands of lithium-ion technology vying for supremacy, winners and losers will be decided in the coming years as companies race to supply the world, from car makers like Tesla, Volkswagen and BYD, to battery makers like CATL and LG Energy Solution, and mining companies like Glencore and BHP.

Rise of Lithium Ion

Invented in the 1970s by US-based scientists and commercialized in 1991 by Sony of Japan to power its Handycam video cameras, lithium-ion cells pack much more power into smaller, lighter units than lead-acid units. acid or nickel-cadmium that previously dominated the market for rechargeable batteries.

Having helped birth the portable electronics industry, lithium-ion batteries have battled competing technologies to become the dominant force in electric cars after a 90% drop in cost over the past decade. According to London-based battery consultancy Rho Motion, total global deployment of the technology could exceed 1 terawatt-hours this year, equivalent to 17 million medium-sized electric cars.

While demand is also set to rise for on-grid energy storage – an industry that will need to expand enormously to deal with the intermittent nature of solar and wind power as fossil fuel power plants are phased out – the vast majority of investment is flowing into the much larger EV market.

All batteries work on the same principle, producing an electrical current as a stream of ions – electrically charged atoms – passes through a chemical material known as an electrolyte, from the anode to the cathode, the cell’s two electrodes. The flow is reversed during the recharge process.

Lithium-ion refers to an entire category of batteries, describing the type of ion transferred between the anode and cathode, rather than the materials of the electrodes themselves, which vary widely.

Advanced material innovations have led to a variety of lithium-ion batteries, meeting not only different applications, but also characteristics desired by car manufacturers or utility companies. This includes cost, weight, driving range, charging time, number of charge cycles before failure, and safety – a growing concern due to a slew of fires caused by lithium-ion devices.

“Lithium ion provided us with a platform to discover new materials that could be used in the anode, cathode and electrolyte,” said Venkat Srinivasan, director of the Argonne Collaborative Center for Energy Storage Science, part of a US national laboratory.

Anodes are typically made from graphite and dictate how quickly a battery can be charged, while cathodes, which are made from a variety of materials, are the main determinant of a battery’s cost and the amount of energy it can store. .

In the electric car market, two main cathode chemistries are competing: NMC, which uses lithium, nickel, manganese and cobalt in varying amounts, and LFP made from lithium, iron and phosphate.

Race between two technologies

South Korean manufacturers LG Energy Solution and Samsung SDI excel at producing NMC cathodes, which are used in most electric vehicles sold in the West, where their greater range is more suited to driving habits. However, Chinese companies still account for 75% of global production, according to Benchmark data.

China is dominant in LFP batteries, accounting for 99% of world production. The technology has made a big impact in the country due to improvements in energy density, higher levels of safety and lower cost compared to cells containing cobalt and nickel, as well as advances in manufacturing. LFP’s share of the Chinese market has increased to 60% in just three years, according to estimates by Rho Motion.

“The Chinese have cracked the LFP code,” said Chris Berry, president of House Mountain Partners, a Washington-based battery metals consulting firm.

The battle between cathode chemistries will exert an enormous influence on global supply and demand for lithium, nickel, cobalt and manganese, helping or thwarting supplying countries such as Indonesia, the Democratic Republic of Congo and Chile.

Meanwhile, the choices of consumers, policymakers and automakers will play a crucial role in consolidating or eroding China’s dominance of the global EV market, risking a slower and more costly energy transition.

“A third of the value of a passenger car is the battery,” said Dirk Uwe Sauer, research professor of battery and power systems at RWTH Aachen University in Germany. “By not having control of this technology, we’re going to have a lot of difficulties for the foreseeable future in a world where you can’t be sure who’s going to be your friend and deliver things tomorrow.”

Western start-ups are working on developing their own LFP technology, while Korean battery makers are chasing Chinese ones. LG Energy Solution, the largest producer of batteries for electric vehicles after China’s CATL, announced in March that it would allocate US$2.3 billion (R$11.4 billion) of an investment of US$5.5 billion (R$27 billion). .2 billion) in manufacturing in Arizona (USA) for the production of LFP batteries for energy storage systems.

“You’re talking about building infrastructure for an industry that needs to grow 10x over the next few years,” explained Michael Finelli, president of growth initiatives at Solvay, a supplier of battery components. “While a battery is just a storage device, it is a critical component of the energy transition… These things are now considered national security items. You don’t want to be dependent on another country.”

Global automakers are asking South Korean companies to make LFP batteries, but “Korea cannot win a price war with China in this segment, given China’s huge state support,” said Sun Yang-Kook, battery expert at Hanyang University in Seoul.

By taking over the leadership of the LFP, Chinese manufacturers have developed ways to produce the technology cheaply and on a large scale, putting the West in a tough spot.

Ford, for example, found itself at the center of a political firestorm in Washington after it partnered with CATL on a licensing deal to produce LFP batteries in the United States.

The West’s Dilemma Over China’s Domination

In the coming years, lithium-ion batteries are likely to undergo tweaks that improve performance and reduce cost, for example, adding manganese to the cathode, mixing more silicon into the graphite anode, or increasing nickel over cobalt in cells. NMC.

Some expect more radical changes, arguing that next-generation technologies such as sodium-ion and solid-state batteries could gain ground in this decade.

But Tim Wood-Dow, lead nickel and cobalt analyst at Trafigura, one of the world’s largest commodity trading companies, said the biggest driver of change in the battery market over the next decade will be the direction the West takes in relation to two main types of cathode.
“Battery investments have all been in NMC in the West,” he said, but “there could be a significant shift to LFP later in this decade.”

The choice for the United States and Europe, battery experts say, ultimately represents the delicate balance the West must strike between reducing dependence on China or accepting it as the cost of maintaining access to highly competitive technologies. and accessible.

“The problem is how to compete with China,” said Shirley Meng, a materials scientist at the University of Chicago, adding that while the US government is seeking to reduce the country’s dependence on the Asian nation, “the Chinese have the know-how -how… it makes no sense to reinvent the wheel when the Chinese have optimized the process”.