Lithium (Li)-ion batteries are the most prevalent rechargeable batteries with applications across a wide range of industries such as consumer electronics, electric vehicles (EVs), and stationary energy storage. Their ubiquitous use is due to their many advantages, which include high energy density, low maintenance cost, long lifespan, and high voltage capacity.
For instance, high energy density allows for longer driving ranges in EVs, while their low maintenance and long life make them highly preferred for consumer electronics and stationary storage applications. However, these batteries are also prone to short-circuiting and fire under high thermal or mechanical stress, and exhibit low performance in very cold conditions.
In recent years, new challenges have emerged for Li-ion batteries, namely reliance on increasingly concentrated and at-risk supply chains and cost-performance challenges associated with battery manufacturing. To address these challenges and provide performance comparable to or superior to existing energy storage solutions, battery manufacturers are developing novel battery chemistries.
This article delves into these challenges, focusing on battery cost and the supply chain of critical materials, with a keen eye on cobalt, nickel, and lithium sourcing. Additionally, we also examine the role of emerging technologies, such as sodium-ion (Na-ion) and lithium-sulfur (Li-S) batteries, which are poised to reshape the battery industry landscape.
Demand Forecast: Stationary Storage and Electric Mobility Driving Explosive Growth
At present, there are three most popular variants of Li-ion batteries defined by cathode material –NMC (nickel manganese cobalt), LFP (lithium iron phosphate), and NCA (nickel cobalt aluminum). Each of these chemistries contains nickel, cobalt, or lithium as the critical raw material. Globally, demand for Li-ion batteries is expected to rise exponentially driven by increasing sales in EVs and growing penetration of renewable energy sources which require stationary energy storage to store excess electricity and offer grid balancing services.
As per the US Department of Energy (DOE)’s National Renewable Energy Laboratory (NREL), annual Li-ion-based stationary energy storage installations are expected to reach 7.8 GW by 2025 from 1.5 GW in 2020 while cell manufacturing capacity for EVs is expected to rise from 747 gigawatt-hour (GWh) in 2020 to 2,492 GWh by 2025.
Geopolitical Complexities and Sustainability Concerns Creating Supply Chain Disruptions for Key Materials
The steep increase in battery demand as indicated by the NREL will require a secured supply of lithium, nickel, cobalt, manganese, and graphite which form key components of cathode and anode active material. Most of these materials are only available in countries that are not geopolitically stable. There are also concerns regarding unethical mining practices in some of the supplying countries.
For instance, cobalt is a critical raw material whose supply has come under increasing scrutiny due to socio-economic concerns. Approximately 70% of the cobalt is produced in the Democratic Republic of Congo where there are serious allegations of unsustainable and unethical mining practices. Cobalt is predominantly used in NMC batteries with NMC 111 (containing 33.3% nickel, 33.3% manganese, and 33.3% cobalt) as the conventional composition of cathode.
Manufacturers have developed new cathode configurations to reduce cobalt content within NMC such as NMC 532 (50% nickel, 30% manganese, and 20% cobalt), NMC 622 (60% nickel, 20% manganese, and 20% cobalt), and NMC 811 (80% nickel, 10% manganese, and 10% cobalt) while increasing battery energy density. However, while reducing or eliminating cobalt leads to cost reduction, it makes batteries less safe.
NMC batteries have gained significance in recent years due to higher energy density leading to enhanced driving ranges in EVs. Nickel is an important cathode material as it allows for higher energy density and charge storage capacities in batteries. However, similar to cobalt, its supply chain is currently under severe stress.
This is mostly due to the lack of active mines and high price volatility resulting from the Russia-Ukraine war. Russia is the third largest producer of nickel (Indonesia is the first largest producer and the Philippines is the second largest) and holds a strong grip on the supply of high-grade nickel. As a result, manufacturers have undertaken battery development initiatives that are aimed primarily at reducing nickel content while simultaneously looking toward the next generation of batteries.
An emerging solution in the Li-ion ecosystem is the LFP battery which offers significant cost and safety advantages at the expense of low energy density. The current raw material bottlenecks in NMC battery production, especially nickel and cobalt, have created a conducive environment for the adoption of LFP batteries across the EV sector. These batteries are expected to bring down the cost of EVs significantly as battery packs account for 30-40% of the cost of EVs. This is due to the significant price differences in NMC and LFP battery technologies as LFP batteries are 20% cost effective.
However, the adoption of LFPs is likely to offer a lower range for EVs due to their lower energy density. Industry stakeholders are trying to address the low energy density challenge of LFP batteries to make them more attractive for EV applications. Gotion, a Chinese battery supplier for the Volkswagen Group has unveiled a new version of LFP chemistry – lithium-manganese-iron-phosphate (LMFP) battery – which has demonstrated a gravimetric energy density of 240 watt-hours per kilogram (Wh/kg), which is significantly higher than the conventional LFP battery.
Lithium is one of the most impacted metals due to supply uncertainties and shortages. This is mostly due to its concentration in locations that are not economically or geopolitically stable. The Lithium Triangle comprising Bolivia, Chile, and Argentina contains approximately 58% of the global lithium reserves. All three countries are currently under severe economic stress and are not considered to be attractive investment destinations. This has negatively impacted lithium extraction projects in these countries leading to a negative impact on the supply. As a result, there are serious concerns that current lithium production will not be able to meet the expected demand.
Supply Chain Disruptions Can Result in Reversals in Battery Cost Reductions
The supply chain risks associated with nickel, cobalt, and lithium are invariably linked to the cost of batteries. Cathode active materials (CAMs) and anode active materials (AAMs) share the majority of battery cost accounting for 70% of the cost of each cell while raw materials – which form important components of CAMs and AAMs – amount to 30% of the overall cost. Despite the global popularity of Li-ion batteries, their manufacturing is still very cost-intensive, and the industry has seen reversals in long-term price decline trends. As per the Bloomberg NEF, in 2022, the battery pack prices witnessed an average cost increase of 7% in terms of $/kWh compared to 2021 across all Li-ion chemistries and applications.
To summarise, the current Li-ion chemistries can have a specific advantage over the others, but still fall short of completely solving the cost-performance trade-off and are not completely immune to supply chain risks due to the use of lithium. This makes the development of the next generation of batteries with similar or higher performance characteristics critical for sustaining the growth of EVs and the renewable energy sector.
Lithium-sulphur and Sodium-Ion Stand Out Amongst Emerging Candidate Chemistries
The next-generation battery development ecosystem presents a mosaic of chemistries at an early or late stage of development. Some prominent lithium-based chemistries include Li-S and lithium-air batteries. Li-S batteries are gaining strong industry interest due to their high energy density.
These batteries are already close to commercialization and some of the industry players have demonstrated energy density of up to 500 Wh/kg with these batteries. Zeta Energy (US) is one of the leading companies in the Li-S battery space and their battery offers a high gravimetric energy density of 450 Wh/kg. Some of the other critical advantages of Li-S batteries include the use of sustainable raw materials, the elimination of cobalt and nickel, and high safety.
Once commercialized, the high energy density of these batteries will also minimize the use of lithium for the same EV performance, minimizing lithium supply chain and cost impacts if not eliminating them completely. Li-S batteries are also being explored for utilization in the power tools and electric aviation sectors in addition to land-based mobility applications. These batteries are expected to be commercialized in the next 5-10 years as challenges remain pertaining to lower cycle life as well as capacity loss due to the shuttling of soluble polysulfides from the cathode into the electrolyte.
In recent years, battery manufacturers have been developing batteries that replace lithium with other alkali metals, most prominently sodium and potassium, both abundant and widely distributed. Among the candidates for the next generation of chemistries, Na-ion batteries are at the forefront. They offer several advantages such as low material cost, environmentally safe use, zero charge transportation, higher operating temperature range, and fast charging capabilities.
Their disadvantages include lower cycle life than LFP (5000 cycles compared to 8,000 – 10,000 for LFP) and low energy density (below 200 Wh/kg). However, as these batteries do not use lithium, cobalt, or nickel, their use by battery manufacturers is gaining traction, and their wide-scale commercialization is expected in the next 5 years.
Na-ion batteries are also gaining industry interest due to their wide-scale applications. The most prominent application is stationary energy storage for grids and data centers due to their fast response capabilities and high safety.
There has been growing interest in deploying these batteries for short-range EVs such as in urban transportation and industrial mobility solutions. Natron Energy (US) and Faradion (UK) are two companies working in the domain of Na-ion batteries. Natron Energy provides Na-ion batteries for usage in industrial mobility, backup power for data centers and telecom infrastructure as well as for usage in EV charging systems. Natron’s battery is expected to offer extremely long cycle life (>50,000) as well as high charging rates (sub 10 min charging time). Faradion provides Na-ion batteries for stationary applications and offers high cycle life and low cost.
Some other notable battery chemistries under development include aluminium-air battery, magnesium battery, iron-air battery, and calcium battery which have applications across stationery and mobility solutions.
Conclusion
Li-ion batteries have undeniably reshaped our world, but their journey is far from over. Over the next decade, the global battery industry is expecting long-term supply shortages of critical materials. As a result, new prominent battery chemistries that will have a global manufacturing potential and cost advantages over current Li-ion chemistries are likely to emerge. Li-S, metal-air, and Na-ion batteries are likely to gain significant momentum in the coming years while the Li-ion battery landscape will continue to shift toward the utilization of LFP chemistry.
As new solutions emerge, they are likely to have a profound impact on electric mobility and stationary storage industries, providing the necessary impetus to achieve deep decarbonization goals. With relentless innovations, the future of energy storage looks brighter than ever.
Authored By: Shrinivas Tukdeo, Research Director, TechVision, Frost & Sullivan, and Nikhil Paranjape, Senior Research Analyst, TechVision, Frost & Sullivan
Blog Received On Mail By Frost & Sullivan
