Supply Speed Bumps On The Road To Electrification

There is no doubt that we are on the path towards electrification. Wood Mackenzie’s recent analysis of mobility transition shows that, depending on where they are driven, electric vehicles use up to 67 per cent less greenhouse gas emissions than conventional gasoline cars on a well-to-wheel basis. As such, they have a critical role to play in a decarbonised economy.

Nearly every big automotive company and government has set out ambitious plans for electric vehicles (EVs), but the important question is whether the associated timelines are realistic? By implementing an integrated view — across power, oils, chemicals and mining — it’s clear to Wood Mackenzie there will be hurdles to overcome.

For example, the idea of an endless supply of metals for millions of EVs globally has left us scratching our heads. The current generation of batteries will certainly be used for the next wave of EV models but post 2025, there will be a shortage of lithium, nickel and cobalt. Higher raw material prices can incentivise new metals production to some extent but this takes time — it can often take up to 10 years to bring a new operation online. And, of course, a high raw materials price environment raises the issue of battery costs.

Improved charging infrastructure and recycling have the potential to ease some of the pressure on raw materials supply. However, access to an increased number of faster charging points doesn’t necessarily mean consumers will flock to EVs with smaller batteries. Similarly, significant volumes of recycled material are, at the very best, a decade away.

The solution has to be a technological one. Incremental increases in energy density mean less metal is required per kilowatt hour. We already see this improvement, however new chemistries and technologies can offer step changes in energy density that just might keep EV targets on track.

There’s a reason why nearly all portable electronics and electric vehicles use lithium-ion battery technology. Since its introduction in 1991, the technology has offered the greatest balance between energy and power. Falling costs and performance improvements have also made it difficult for other technologies to break into the market.

Battery scientists have been working on improving lithium-ion energy density for decades and one way of doing this is to change cathode chemistries. The EV industry appears to have settled on a few key chemistries for now, as they offer the best combination of safety, cost and performance: LFP (lithium iron phosphate), NCA (nickel, cobalt aluminium) and NMC (nickel manganese cobalt).

Although LFP has been China’s chemistry of choice, recent subsidy changes massively favour the more energy dense NMC cathode. NMC is used by the large majority of those who are left, with the exception of Tesla — a brand that swears by Panasonic’s NCA-based technology. By 2025, Wood Mackenzie expects about 85 per cent of EV battery demand to be NMC or NCA.

Even within these chemistry types there are differences, as the cathode intensities are tweaked to maximise energy density. Currently, the favoured strategy is to increase nickel in the cathode — an approach that can improve energy densities by about 15 per cent. Unfortunately this is typically at the expense of safety, and therefore the commercialisation of high-nickel cathodes is taking much longer than many anticipated.

In its current form, lithium-ion technology is approaching its theoretical limit. To drastically reduce the metal requirements of an EV battery, a metamorphosis in energy density is required. For this to become a reality, a new approach is being developed — the solid state battery.

By replacing the liquid electrolyte in a battery with a solid one, metallic lithium can be used as the anode. This means energy densities could potentially double from those of current technologies, with the added bonus of being inherently safer.

But not any time soon, unfortunately. There have been huge investments in a handful of solid state battery companies recently, yet commercialisation is years away. On top of that, it will take several more years to integrate the new battery into the vehicle design and supply chain.

With big model releases and announcements more akin to the tech world, it’s very easy to get caught up in the EV hype. Undoubtedly, electrification is happening and many of the barriers are starting to fade away. It’s important the industry remembers, however, that EV penetration can only be as fast as new mines can be brought online.

Source: Milan Thakore (Wood Mackenzie) Financial Times

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