Hybrid and Electric Vehicles Continue to Drive Growth in Lithium-Ion Batteries
The transition from a market dominated by portable electronics to a market led by lithium-ion batteries in xEVs and ESS has seen the requirements for larger batteries with greater battery capacity, longevity, and reliability.
The demand for lithium-ion batteries continues to increase at a rapid pace, driven by the growth in hybrid and electric vehicle (xEV) production and the use of lithium-ion batteries in energy storage systems (ESS), according to Roskill. The transition from a market dominated by portable electronics to a market led by lithium-ion batteries in xEVs and ESS has seen the requirements for larger batteries with greater battery capacity, longevity, and reliability. These changing battery requirements have catalyzed the production and use of higher nickel-cathode chemistries such as NCA, NCM 532 and NCM 622.
The strong demand growth forecast for lithium-ion batteries requires many individual components to be produced in order to manufacture a lithium-ion battery cell. These include cathodes, anodes, separators, electrolyte salts and solutions, copper and aluminum foils, binders, and cell cases, all of which require a wide array of materials and industrial expertise. The supply chain and production processes for these materials are complex and long, involving multiples stages, with over 150 established companies producing the nine key components required for the final battery cell product.
The focus of the lithium-ion battery supply chain has been solidly centered in the Asian market, with over 87% of lithium-ion battery cell producers profiled located in Asia, though several producers plan to construct new manufacturing facilities in Europe and the U.S. These expansions will ultimately adjust to evolving demand, especially from the automotive industry.
Regulatory changes across all regions have accelerated the development and uptake of xEVs, with emissions standards, subsidies and incentives; potential bans on the sale of combustion vehicles are influencing automaker investments, future models, and consumer choice. The ongoing trend is considered irreversible, as OEMs and component manufacturers have invested heavily in production infrastructure and research and development capabilities for xEVs. Transportation and energy sectors will need to become cleaner, and lithium-ion batteries are currently the most suitable instrument to achieve that end.
In 2018, China remained the largest market for xEVs, with sales surpassing 1 million units for the first time. China has supported the production and sales of xEVs in its domestic market through a series of subsidies and incentives, resulting in both cash and non-cash benefits. These subsidies were changed in January 2019 to reduce the benefits applied to lower range xEVs, impacting vehicles with ranges under 200 km. As manufacturers now look to target vehicles with longer ranges to still qualify for subsidies, the requirements of lithium-ion batteries and the demand for the raw materials used in their manufacture is ever-changing.
The demand for raw materials used in lithium-ion batteries is expected to increase exponentially, as a result of both sales volumes and changing requirements for battery components. Lithium demand from lithium-ion batteries is forecast to grow by 26% per year in the years to 2028, increasing from 136.7 kt lithium carbonate equivalent (LCE) to in excess of 1.4 Mt LCE. Demand for nickel and cobalt will also experience considerable demand growth, albeit their feedstock availability may be compromised. Beyond feedstock, the previous minerals and other relatively abundant materials, such as as graphite and copper, will face challenges, especially in the conversion capacity to process them into battery-grade materials.
Additional details are available at www.roskill.com.