Don’t Write Lithium off yet – More Efficient Batteries are on the way
Lithium producers may be seeing significant drops in revenue, but new battery technology, plus pro-electric vehicle regulation, is just around the corner
From smartphones to laptops, electric vehicles and solar panels, lithium-ion batteries power our world. But the lithium boom appears – on the face of it – to be slowing. Two of the world’s top producers of the metal have seen precipitous drops in profits in the first half of 2019, thanks to China cutting subsidies for electric vehicles and an oversupply of the metal.
The cost of the metal has fallen from $18,000 (£14,700) per metric ton in May 2018 to $10,000 (£8,100) per metric ton this week, according to data from analyst company S&P Platts. However, the fear of a falling market may be overhyped.
“Industry outsiders struggle with the concept of what the lithium price really is,” says Rodney Hooper, an independent lithium industry analyst. “Battery and non-battery grade prices in China have fallen, however the price of OEM-qualified battery-grade lithium [that can be used in phones] outside of China hasn’t fallen materially.”
The drop in prices isn’t ringing alarm bells for the bigger lithium producers, says Marcel Goldenberg, a lithium analyst at S&P Global Platts. “The big companies have said they can push out more volume and keep prices down to see if their competitors can’t produce anymore and might fall, so they can take on a bigger market share.”
However, there is a disparity between supply and demand. “One of the key drivers for lithium uptake is electric vehicles,” says Goldenberg. “While electric vehicle uptake is up, it’s not up as much as the supply side. If we fast-forward, it’s likely to change when we see more exponential growth in electric vehicles.”
The major growth, says Hooper, will come from electric vehicles – which will require high-quality lithium. “Tesla, VW and others all require high spec batteries so that warranties are honoured,” he explains. “If a battery deteriorates, it’s very expensive to replace under warranty.” As a result, car makers are seeking out higher-quality batteries instead.
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They’re also after longer-lasting lithium-based batteries. Those are called lithium-metal (or solid state) batteries, which contain pure lithium-metal, rather than ions of lithium in the electrolyte. “Lithium-metal batteries are the ultimate target,” says Zhiao Yu of Stanford University. “It can provide higher energy density, higher energy capacity, a larger voltage range. This is our holy grail.”
Yu and colleagues have developed a new type of coating for lithium-metal batteries that counteract some of its biggest issues. The better-performing batteries are not used because they’re less safe, running the risk of catching fire, and losing their charge much quicker.
That could be a big development. “You’ll struggle to find a car manufacturer that isn’t interested in solid state batteries and what this can bring in terms of increased range and stability,” says Emmanuel Latham, an analyst at S&P Global Platts. The energy density of solid state batteries would be double the current lithium-ion ones – “so you can drive twice as far on the same battery size,” says Hooper. However, it’s still theoretical. “Most people are realistic that this isn’t something that’s going to occur in the short-term,” says Latham.
The Stanford lithium-metal battery is just one of a number of developments: the United States Department of Energy announced in 2016 a programme to develop high-energy lithium-metal batteries by the early 2020s. In March, the programme announced its second phase of funding for projects.
Similar initiatives in Europe to promote electric vehicles will see demand for lithium-based batteries grow by more than 10 per cent a year to 2025, according to Global Market Insights. The number of electric vehicles on the world’s roads is due to explode from fewer than four million in 2018 to up to 200 million by 2028. “The price of batteries is falling dramatically as we speak due to volume, scale and tech improvements,” says Hooper. “China, EU and California have effectively mandated electric vehicles.”
Lithium – whether for lithium-ion batteries, or more realistically, lithium-metal – will be necessary for that. What’s seen as an oversupplied market could just as quickly flip: Hooper estimates that if Tesla and VW meet their published sales goals, there’ll be no lithium left for other electric vehicle producers.