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Auto-battery makers mull alternative chemistries to lower costs, increase driving range

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Battery makers and car manufacturers have seen a shift in the pursuit of altering battery chemistry to lower the costs of new energy vehicles (NEVs) that are being manufactured and extend their driving range.

Speaking to Engineering News & Mining Weekly, independent research house Afriforesight Battery Metals head Pearson Mururi says there is a continued drive by automotive battery makers to invest in the development of low-cost batteries – which contain less nickel and cobalt – with low energy density for short-driving-range electric vehicles.

It is expected that such batteries will be used in the manufacture of NEVs for sale in the next two years.

Simultaneously, there is ongoing development of high-capacity batteries – with these typically containing a higher nickel content – to enable NEVs to have a longer driving range.

Mururi says that, in the short term, the shift towards altering battery chemistry can be attributed to subsidy cuts in China and the global economic slowdown.

China is the largest NEV market (which includes battery electric vehicles, plug-in hybrids and mild hybrids), with the country accounting for about 30% of global sales in 2019.

However, the country reduced NEV subsidies by more than 50% in July 2019, resulting in an 8% decline in sales in the second half of the year, compared with the first half.

Consequently, sales growth in China declined in 2019, increasing only 1.7%, compared with more than 90% in 2017 and 2018, informs Mururi.

“The subsidy cut is forcing buyers to switch to more affordable NEVs with shorter driving ranges, which, in turn, is forcing many automakers to revert to alternative battery chemistries to lower NEV costs.”

Owing to the negative impact of reducing NEV subsidies, China extended subsidies last month by another three years to 2023, but with some limitations.

The maximum price of NEVs now eligible for subsidies has been set at ¥300 000, or $42 500, per vehicle.

This price cap disqualifies high-end electric vehicles, which is now forcing various automakers to lower their prices to qualify for subsidies. Mururi cites electric vehicle company Tesla as an example – it reduced the price of its standard Model 3 by 10% to ¥290 000.

The minimum driving range required for NEVs that can qualify for subsidies has been set at 300 km, up from 250 km in 2019.

However, the threshold for battery energy density did not change, which allows for lower energy-density battery chemistries to remain competitive. The subsidy will be reduced by a further 20% in 2021 and 30% in 2022, indicates Mururi.

“The current global economic downturn has increased uncertainty among buyers and increased demand for lower-range and more affordable NEVs.

“In the long term, NEVs will need a long driving range to attract internal combustion engine (ICE) buyers who have driving range anxiety.”

Therefore, Afriforesight expects most major vehicle manufacturers to continue pushing research and development of nickel- rich battery chemistries to meet future demand of an 800 km to 1 000 km driving range. The high nickel content ensures a higher energy density, resulting in a longer driving range.

Finding the Right Chemistry

Automotive battery makers mainly produce three main battery chemistries – lithium iron phosphate (LFP), lithium nickel- manganese-cobalt (NMC) and lithium nickel-cobalt-aluminium (NCA) batteries, Mururi notes.

LFP batteries are relatively cheap, as they are simple to make and use low-cost materials. NMC and NCA chemistries are more complex to synthesise and use nickel and cobalt, which tend to have more volatile and higher prices as compared to iron and phosphate inputs used for LFP batteries.

However, high-nickel-content NMC and NCA batteries have high specific energy, providing NEVs with longer driving ranges than other battery chemistries, he explains.

LFP batteries have a significant market share in China, as their low driving range is sufficient for transport in the densely populated cities.

However, the share of LFP batteries declined over the past five years, as subsidies made more expensive NEVs, powered by nickel-rich batteries with a longer driving range, more affordable.

This trend reversed with the reduction of Chinese NEV subsidies that made non-subsidised prices of more expensive vehicles powered by nickel-rich chemistries, such as NMC and NCA, too high for average consumers, indicates Mururi.

Driving the Change

There are several manufacturers that are leading the charge in pursuing these alternatives.

Mururi points out that technological advances, led by China’s largest NEV battery makers, CATL and BYD, are boosting the resurgence of LFP batteries.

Breakthroughs in the packing of LFP cells in an NEV battery by CATL increased energy density by 33% above the industry average. BYD also announced a new LFP battery in late 2019 that can power an NEV for 600 km on a single charge, says Mururi.

Large automotive manufacturers, such as Tesla, have also adopted a short-term strategy to develop low-cost NEV models to meet current market demand, but they continue to develop nickel-rich, high-driving-range battery technologies for future models, he adds.

Tesla is in negotiations with CATL to use the company’s LFP batteries in entry-level Model 3 vehicles to be sold in China.

Tesla has slowly increased the driving range for its premier Model S, which uses NCA chemistry, to about 630 km.

The higher driving range is because of an increase in the nickel ratio at the expense of cobalt. The new technology is termed the NCA+, with a nickel-to-cobalt ratio of about 9.5:0.5. Nickel increases the energy density of the battery and a higher nickel ratio enables the battery to store more energy per given weight, explains Mururi

Ford Motor Company, despite being a small player in the NEV market, is developing a new hybrid chemistry – comprising nickel, manganese, cobalt and aluminium – which can potentially boost the driving range of NEVs, he adds.

Mining Industry Impact

The pursuit of alternative chemistries does not happen in a vacuum and will have a direct impact on the mining industry, owing to its being a major raw materials source for NEV batteries.

Mururi avers that, in the short term, nickel and cobalt producers should be negatively affected as battery makers switch to LFP chemistry.

Lithium should continue to benefit, as it is a major ingredient in all batteries currently used in NEVs.

However, in the long term, nickel stands to benefit the most, as demand for higher driving ranges should lead to the increasing adoption of nickel-rich chemistries.

Cobalt demand should increase from 2021 with rising NEV sales volumes, but should contract in the long term as higher-nickel- containing battery chemistries are adopted and efforts to eliminate cobalt in batteries intensify, says Mururi.

He says that manganese and aluminium should also benefit in the longer term with the adoption of nickel-containing batteries. Manganese and aluminium are vital components in NCA and NCM battery chemistries, as they provide thermal stability.

NEV Market

Mururi notes that the quick response by automotive battery makers to the changes in the market mentioned earlier still allowed for NEV sales to register an increase in China in 2019 despite the subsidy cuts and overall sales decline.

Afriforesight expects the planned changes to battery chemistries this year to help cushion the impact of the global downturn, and to result in a smaller decline in NEV sales, compared with overall vehicles sales.

“The combination of low costs, a competitive driving range and eligibility for subsidies should boost the LFP market share in China until 2023”.

However, downside risks remain and a deeper or prolonged global downturn is likely to affect NEVs more than ICEs, despite industry’s efforts to lower battery costs, adds Mururi.

From 2023 onwards, Afriforesight expects the rapid switch to nickel-rich battery chemistries, and the consequent increased reduction of cobalt, to boost the popularity of NEVs at the expense of ICEs.

Afriforesight expects that the global downturn will accelerate the switch to lower-cost battery chemistries, with LFP to gain more attention to lower NEV costs.

“We also expect to see a delay in the launch of high energy-density battery technologies, with resources to be channelled towards recovering sales and cost-saving innovations such as using cheaper LFP battery chemistry. Automotive makers are also expected to postpone the launch of some new NEV models, owing to lower demand,” Mururi indicates.

The overall costs of batteries should decline on lower nickel, cobalt and lithium input prices, with these prices having decreased 16%, 9% and 5% respectively from the beginning of this year.

Further, battery metals demand has declined more than supply, as Covid-19 has affected the countries that manufacture batteries and are large markets for electric vehicles – such as China, the EU and the US – more than mining jurisdictions such as the Democratic Republic of Congo and Australia. This should worsen oversupply, especially in the lithium and cobalt markets, where prices have been decreasing over the past two years, Mururi notes.

NEV sales are expected to decline this year, owing to disruptions in production and sales because of the Covid-19 lockdowns in China, the EU and the US, but are expected to steadily increase in 2021.

Sales should accelerate from 2023, however, as more countries adopt pro-environment policies. Stricter carbon dioxide emission standards and associated penalties in the EU should also encourage vehicle manufacturers to continue increasing the inclusion of NEV models in their offerings.

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