The Global Future of Automotive Lithium-ion Batteries

By Kent Griffith

July 12, 2019 | The energy was palpable at the Advanced Automotive Battery Conference in San Diego last month as the latest research, engineering, manufacturing, and market perspectives on batteries and electric vehicles (EVs) were presented. The rechargeable lithium-ion battery market for electric vehicles is now at $30–40 billion and poised to exceed $100 billion by 2030. However, at the moment, neither the automakers (OEMs) nor cell manufacturers (Tier 1 suppliers) are profitable. In the plenary session on EV Battery Market Expansion, Wolfgang Bernhart from Roland Berger, a global consultancy headquartered in Munich, attributes this scenario to the following situation: cell makers are vying for market share and are willing to accept losses in the short-term to secure their position while vehicle producers are pushing EVs—at or below cost—to lower the carbon emissions of their fleets. Although Roland Berger does not see consumers willing to pay a premium for hybrid/electric vehicles at this time, the financial pressure on manufacturers to lower vehicle emissions is increasing. The EU target of 95 gCO2/km comes into full effect in 2021, with a €95 penalty for each gCO2/km over the target.

Low profit margins should be a concern not just to battery and EV manufacturers but to anyone concerned about the climate and air quality. Bernhart warns that the profitability of cell suppliers and OEMs is not sufficient to attract the investment required to support the expected growth to 1000 GWh in 2025 and 2000 GWh in 2030. Perhaps this offers an explanation for the underwhelming support for vehicle electrification in the United States from both Toyota Motor North America and Ford Motor Company. While these companies are pursuing electric vehicles, the approaches are far from all-in for the near future.

Ford highlighted that internal combustion engine vehicles are extremely optimized and emissions have improved over the years, though data and modeling for EVs are improving. At the conference, Toyota focused on the idea that this is still the beginning for electric vehicles. In the US, there have been over 1.1m cumulative PHEVs (plug-in hybrid electric vehicles) and BEVs (battery electric vehicles, fully electric) sold, but this represents only 0.4% penetration (1.7% in California). Thus, EVs are in the ‘Innovators’ stage of the Rogers Adoption Curve.

Hurdles—real and imagined—must be overcome for EV penetration into the majority. For example, Toyota found that 80% of EV owners are “satisfied” or “partially satisfied” with the battery charging infrastructure for their cars while 80% of non-EV owners could not identify the location of a single charging point. Even with sufficient chargers, the increasing complexity of charging from different suppliers and different membership options is a growing complaint among the “innovators”. The attitude of the automakers is incommensurate with the presentation from the California Air Resources Board who emphasized that zero emissions vehicles are required urgently to decrease NOx and ozone levels as well as mitigate climate change. A common theme between the environmental board and the automakers was that battery end-of-life questions hinder EV sales because the resale value is lower than conventional vehicles. Better understanding of the lifetime, easier/cheaper pack replacement, and high-value second-life applications would go a long way toward relieving EV consumers.

There was some emphasis on the US market at this AABC conference in San Diego but of course the vast majority of cell manufacturers and EV producers are in Asia: China, Japan, and Korea. Dr. Mark Lu from the Industrial Technology Research Institute in Taiwan gave an overview of the Chinese market. EV sales in China in 2018 were 1.25m, which, for context, is greater than the aforementioned cumulative total of US EV sales. Thus far, electrification of transport in China has been driven by heavy subsidies and incentives; the big question is what will happen next year when these are removed.

The other big change for China is the very recent partial opening of the market to outside competition. Two-thirds of Chinese EV batteries in 2018 were supplied by just four manufacturers: CATL, BYD, GXGK, and Lishen, with the first two representing 75% of 2019 sales. Each manufacturer is supplying a mix of chemistries dominated by either NMC (nickel manganese cobalt oxide (Li[NixMnyCoz]O2)) or LFP (lithium iron phosphate (LiFePO4)) cathodes. Due to the size and early adoption, China will be the first to face downstream challenges such as large-scale recycling and second-life applications, though Bernhart pointed out that China is already recycling 260,000 ton/year of battery materials.

Hideo Takeshita, President and CEO of B3 Corporation, provided the most controversial opinions of the conference. Noting the low profitability of batteries for electric vehicles, and citing “lack of will”, he stated that, “in the next ten years, Panasonic will be out of the game.” Further, he suggested that Samsung may focus on mobile and grid-scale batteries and get out of the EV battery business. Takeshita sees a brighter future for LG Chem and CATL. He was also bullish on pouch cell geometries, which have advantages for time-to-design and integration, factors that are especially important for fast-moving technologies. Overall, there are varying opinions on everything from battery chemistries to form factors to cell manufacturers to automakers regarding the future of battery electric vehicles. Time will tell.