The global contest has automakers looking to shape their future fortunes as the combustion engine era recedes. The chemical makeup of batteries has become one of the biggest concerns of all major automakers, including Volkswagen, General Motors, Toyota, and Ford.

Given that batteries make up about a third of the cost of electric cars, driving down battery costs is essential in driving widespread consumer adoption and ensuring healthy margins for automakers.  

Switch to LFP

Most electric vehicle batteries used in rely on ternary cathode chemistries—which use nickel, cobalt and manganese as key ingredients. However, a range of automakers are moving to use lithium iron phosphate (LFP) batteries in their lower-end models.

The biggest drawback of LFP cells is lower energy density, offering less driving distance on a single charge for the same weight compared with NCM/NCA. Their key advantage, however, is price. They are around 30% cheaper than their nickel-rich counterparts.

Price concerns continue to ramp up as battery makers have been raising the price of their lithium-ion batteries, challenging automakers attempts to drive down EV costs, as surging battery metals prices squeeze margins.

The technology is popular in China, where more than 95% of LFP battery cells are made. Almost all of them are produced by CATL and BYD. China also controls more than 80% of global refining and mining of battery raw materials.

This year, the expiration of patent restrictions that blocked Chinese battery makers from exporting LFP batteries overseas could drive further adoption. Furthermore, licensing fees for producers outside China to use key technology for these batteries will also end.

Tesla plans to offer LFP batteries in all its standard range, lower-priced EVs globally. Historically reliant on nickel cobalt aluminium (NCA) batteries, Tesla started using LFP cells from CATL for its standard range models produced at its Shanghai Gigafactory last year. It has reportedly inked another LFP supply deal with BYD.

Meanwhile, Ford is planning to use them in some trucks sold under its Ion Boost Pro brand for fleet owners. Rivian said this month that it would use LFP cells for its standard-level vehicles, and high-nickel chemistry for its longer-range vehicles. 

Volkswagen plans to have a unified battery cell from 2023, using LFP, in entry models; nickel-manganese in volume models; and nickel-rich NCM in high-end models. Meanwhile, Daimler said it will switch to LFP cells for EVS in the lower price segment from 2024.

The biggest drawback of LFP is lower range. Tesla models using these batteries can drive about 270 miles on a charge, compared with about 358 miles for similar models powered by ternary chemistries. Also, LFP batteries can lose some of their power when the temperature drops below freezing and take longer to charge.

Despite the cost savings, automakers have largely opted to stay with nickel-based lithium-ion batteries made by South Korean and Japanese makers, which make up more than 85% of the EV battery market outside China. Almost all of them are made by Japan’s Panasonic and South Korea’s LG Energy Solution and Samsung SDI.

However, the tide looks to be turning in favour of LFP becoming the new global standard in entry-level EVs. The trend is expected to continue particularly as charging infrastructure develops to a point where longer range is less of a concern.

Higher Nickel, Less Cobalt

Battery makers are gearing to produce the next-generation of lithium-ion batteries, which have a high nickel content. A battery cell with a nickel content of more than 80% is classified as high-nickel, offering longer mileage and shorter charging times, compared to existing batteries.

Tesla said in February that it had already built one million cells for its next generation “4680” battery, which it has started to use in its Model Y crossovers. Chief executive, Elon Musk, has said the battery will have 16% more range because of its honeycomb design.

Ford’s new electric F-150 pickup will use high-nickel batteries from SK Innovation. The cells are the world’s first high-density NCM9—which has 90% nickel content in the cathode, according to the South Korean battery maker. Meanwhile, BMW will also use high-nickel batteries, from Samsung SDI, for its SUV iX.

General Motors says that its Ultium battery cell will use 70% less cobalt than the ones used in the Chevrolet Bolt hatchback. The GMC Hummer pickup, which GM recently started selling, is the first vehicle to have this battery. It will be followed by an electric Cadillac Lyriq SUV and an electric Chevrolet Silverado pickup. Ultium is a joint venture with LG Energy Solution.

Safety is a key imperative of batteries, both on a branding and cost perspective. Last year, GM had to recall all 142k Bolts going back to the 2017 model due a battery defect that can lead to fires. The high-profile misstep was estimated to cost US$2bn, of which US$1.9bn would be reimbursed by LG Chem, which manufactured the defective battery modules.  

GM isn’t the only automaker who has faced challenges with battery packs safety. Tesla cars have caught on fire because of overheating in their battery systems. Hyundai recently recalled a small number of electric Kona SUVs to replace batteries. The Detroit-based company aims to introduce 30 EVs over the next few years, including 20 in the US, all using this new, modular battery design.

Many automakers are eager to reduce their reliance on cobalt because of the high cost and because it mostly comes from the Democratic Republic of Congo, because of human rights concerns.

Solid State Batteries

Solid-state batteries have been touted as having higher energy density, shorter charging times and costing less than traditional lithium-ion batteries. They offer the promise of charging your EV in minutes and having a shelf life of around 25 years.

The next-generation power source, named for the solid electrolytes that replace the flammable liquid solution in current lithium-ion batteries, are thus lighter, can store energy far more densely and charge faster. They are also a lot less likely to ignite and, therefore, need less cooling equipment.

Most major carmakers are getting on board. Volkswagen has invested more than US$300m on California-based QuantumScape. BMW and Ford are betting on Colorado-based Solid Power. GM has invested in SES AI Corporation, which emerged from the Massachusetts Institute of Technology (MIT).

Meanwhile, Mercedes-Benz, Stellantis and Hyundai have all backed Factorial Energy, which says its solid-state technology increases range between 20-50%, relative to standard lithium-ion batteries. Construction of the company’s pilot production facility, located in the New England area, is expected to start this year. The start-up successfully developed the first 40 Amp-hour solid-state battery in 2021. 

The world got its first look at a solid-state-powered EVs at the Tokyo Olympics last year, where Toyota, in partnership with Panasonic, outfitted a fleet of its LQ concept cars. Despite the exciting progress, the technology is still years from commercial viability.

Solid Power CEO Doug Campbell says the company is five years away from commercial viability.  The company’s current target is a battery that’s almost twice the energy density of current auto cells, which can charge to 90% in just 10 minutes.

Toyota expects their solid-state battery to come in 2025, and Stellantis has the same goal for a year later. However, most auto executives don’t expect the technology will be broadly available until about 2030, given that most companies are still entrenched in the research and development phase.

However, the technology keeps evolving, making estimates tricky. For example, US scientists from Brown University and the University of Maryland believe that cellulose, a material derived from trees, could replace the volatile liquid electrolytes in lithium-ion batteries. When mixed with copper, a layer is formed that conducts ions up to 100 times better than other polymers proposed for solid-state electrolytes.

Lithium Sulfur Batteries

Researchers from Australia’s Monash University have developed new technology that will improve the efficiency and lifespan of lithium-sulfur batteries—which do not rely on cobalt, nickel and manganese.

Lithium-sulfur batteries already offer higher energy density and reduced costs, according to the researchers, but the electrodes in these batteries deteriorated rapidly during the recharge process. The team believe they have fixed that issue, developing a battery interlayer that allows for fast charging, as well as improving the battery’s life and performance.

This latest breakthrough, published by the Royal Society of Chemistry this month, comes just weeks after scientists in the US announced they had developed a lithium-sulfur battery using a commercially available carbonate electrolyte, that retained more than 80% of its initial capacity after 4,000 cycles.

New Extraction Methods

Berkshire Hathaway Energy Renewables plans to break ground in the coming months on a California facility to test the commercial viability of a process that extracts lithium from geothermal brine. If the test proves successful, commercial production of lithium hydroxide and lithium carbonate could begin by 2026. The plants have received a US$6m grant from the California Energy Commission and US$14.9m grant from the Department of Energy.

Battery recycler Redwood Materials is launching a pilot project in California with Ford and Volvo to extract lithium, cobalt, nickel and graphite from retired lithium-ion batteries used in EVs. Redwood says it will accept all lithium-ion and nickel metal hydride batteries in the state. California is by far the biggest market for EVs in the US, with purchases of 247k in 2021, according to the California Energy Commission.

Earlier this year, Panasonic said that cells made at its Nevada Gigafactory, that it operates with Tesla, will use more recycled materials by the end of 2022, as part of an expanded relationship with Redwood.

Redwood has raised about US$800m to expand its operations as demand for EV batteries grows. The company estimates it can already recover about 6GWh of used batteries, battery scrap and electronics annually, enough to supply battery packs for 60k EVs. The company is planning to build a US$1bn plant in the US to make battery materials from recycled elements.

The Biden administration is encouraging companies to move more of the battery supply chain to the US as foreign dependence, particularly from China, poses a threat to America’s economy and security.

“We can’t build a future that’s made in America if we ourselves are dependent on China for the materials that power the products of today and tomorrow,” Mr Biden said at a White House event on 22^nd February.

Mr Biden said that the US currently had to import close to 100% of the critical minerals it needed from other countries, particularly China, Australia and Chile.