Batteries are the new oil
With new innovation in battery technology driving change in the vehicle market, is the age of electric cars now dawning?
Automobile manufacturers are rapidly transitioning their product lines from internal combustion towards hybrid and all-electric vehicles; and demand for these vehicle types continues to grow across the globe.
According to the International Energy Agency (IEA), demand for electric vehicles in 2020 grew by 41% over 2019. Over 3 million electric vehicles were registered in 2020, representing 4.6% of total vehicle sales – with Europe leading the charge.
To date more than 11 million electric vehicles are on the roads (including over 1 million electric vans, heavy duty trucks and buses). Of these 11 million electric vehicles, battery electric vehicles (BEVs) accounted for two in three new electric car registrations and two-thirds of the stock in 2020.
Demand for electric vehicles is expected to grow to 145 million by 2030, but could reach 230 million if governments accelerate efforts to reach international climate and energy goals.
Suffice to say, that is going to require A LOT of batteries.
The race to build battery capacity is on
Globally, automotive lithium-ion battery production was 160GWh in 2020, up 33% from 2019 (IEA Global EV Outlook 2021). This is expected to increase to as much as 3.2TWh by the end of this decade.
In 2020, China accounted for the largest share of battery demand at more than 50%, followed by Europe (33%), North America (12%) and the rest of the world at 5%. It’s no surprise that the majority of battery manufacturing is based in China. However, with increasing demand (for example, Europe grew by 110% year-over-year), the race to build battery capacity in all regions is on.
In Europe, demand for batteries in 2020 exceeded domestic production capacity, which is roughly 35GWh per year. Anticipating the future needs, the European Commission launched the European Battery Alliance (EBA) in 2017 with the goal to develop an innovative, competitive and sustainable battery value chain in Europe. Its EBA250 initiative has established a target to create a market that will capture 250 billion euros a year by 2025.
To achieve this goal, the EBA has developed a comprehensive framework of regulatory and non-regulatory measures to support all segments of the battery value chain and the following six priority areas:
Actions taken by the EBA with support from the European Investment Bank (EIB) has already resulted in more than 20 multi-gigawatt lithium battery factories being built across Europe, with announced capacity of up to 400GWh by 2025, up from 35GWh in 2020.
In June 2021, the US Department of Energy (DOE) released its National Blueprint for Lithium Batteries, 2021-2030 (developed by the Federal Consortium for Advanced Batteries (FCAB)) and announced 200 million dollars in funding to support battery technology research, development, and demonstration.
The goals of this plan are:
Innovation critical for success
Although there are a number of companies rushing to build battery manufacturing capacity to meet demand, the need for continuing innovation in battery technology is more important than ever. This includes developing technology and processes that will allow major improvements in performance, cost, safety and environmental impact.
This means developing batteries that are fast-charging and offer long-range at a cost-effective price point. While individually each of these can be achieved, to date, achieving one with the other has been difficult to balance.
Significant advances in battery energy storage technologies have occurred in the last 10 years, leading to energy density increases and battery pack cost decreases of approximately 85%, reaching 143 dollars per kWh in 2020. However, the current target is to reach 75 to 80 dollars per kWh by 2030.
An example of battery innovation comes not from Tesla but GM with its Ultium batteries. The flexible platform allows the pouch-style cells to be stacked either vertically or horizontally inside the battery pack, optimizing layout for each vehicle design. GM says it can be transformed into 19 different battery and drivetrain configurations, including battery capacity options between 50kWh and 200kWh, enabling a GM-estimated range up to 400 miles or more on a full charge with 0 to 60mph acceleration as low as three seconds.
In a joint venture with LG Chem, battery cell costs are expected to be below the industry sweet spot (the point at which the cost of owning an electric vehicle is on par with internal combustion engine vehicles) of 100 dollars per kWh. Further technological and manufacturing breakthroughs are expected to drive costs even lower.
After multiple attempts, it’s clear that the time for electric vehicles is finally right. Although challenges remain, most notably in having enough materials to build batteries – innovation in the development of new materials, processes and even reuse/recycling is offering new enthusiasm for this sector. Backed by significant investment as well as strong government/country policy and regulation, the transition away from conventional transportation is well underway.
As Henry Ford stated: Failure is simply the opportunity to begin again, this time more intelligently.