Automakers and battery suppliers are racing to develop the next generation of batteries that are cheaper, more powerful and charge faster.
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.
Globally,
in the first half of 2021, the market share of LFP batteries rose to an
estimated 25%, from 15% a year earlier, fuelled by surging sales of small and
inexpensive electric models in China. Indeed, sales of the tiny Wuling
Hongguang mini-EV, which retails at around CNY28,800 (US$4,500), reached 378k
units in 2021.
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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.
China’s
grip on the LFP market will only strengthen in the coming years. CATL has the
more ambitious plans, planning to grow capacity from 150GWh to almost 850GWh
by 2030—almost a six-fold increase.
In
2021, China's LFP battery production soared 263% to 125.4GWh, accounting for
57.1% of the country’s total battery production of 219.7GWh. China’s
production of ternary batteries also rose strongly, but by a lesser 94%, to
93.9GWh, accounting for 42.7% of the total. AME expects the market share of
LFP and NCM to come in at 60% and 40%, respectively, in 2022.
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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 22nd 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.