—Batteries – the next big thingThe world has a growing appetite for batteries, not just more, but bigger and better. How will that demand be met? And what impact will dramatically expanded battery use have on society?

Addressing the rising torrent of batteries, Simon Moores, Managing Director of Benchmark Mineral Intelligence, starts at the headwaters:

“China’s lithium ion battery strategy will be the key to producing enough high quality lithium ion cells,” he says. “Nearly 70 per cent of new lithium ion battery capacity is being built in China via a combination of Chinese, Japanese and Korean producers. These volumes are also being built out in a number of battery mega-factories around the world, a trend that was sparked by Tesla’s Giga-factory project in Nevada.” Of the 16 lithium ion battery mega-factories tracked by Benchmark Mineral Intelligence, Moores reports that 10 are located in China.

Asked whether we will we see a ‘Moore’s Law’ for batteries take effect, with capacity doubling on a regular basis as prices fall, Simon Moores is cautious:

“I think the comparison to Moore’s Law and the computer chip manufacturing is a bit of a leap of faith,” he states. “There is no doubt that battery

costs are plummeting. We have seen cell manu-facturing costs fall from USD 1000 per kilowatt hour (kWh) in 2009, to USD 250 per kWh in 2015.” Costs have continued to decline since then, he adds, with some buyers of cells paying under USD 140 per kWh in the first half of 2017. “This is an incredible decline from where we were even two years ago.”

He explains that batteries differ from transistors and computer chips in that raw materials are a more significant portion of the cost of a battery. The cost of manufacturing the cell may be falling as the industry ramps up on scale, but raw mater-ial costs are increasingly influencing the price of batteries.

“Raw materials for batteries are specialty chem-icals that are mined and processed to stringent specifications. The price of these specialised raw materials will always have a slowing factor on price decline, particularly when new raw material supply is needed to fuel the lithium ion battery re-volution we are now experiencing. Lithium chem-icals have surged to four times their value from two years ago, with cobalt more than doubling in less than 12 months.”

Moving onThe age of electric vehicles, or EVs, has dawned. What does Moores see as the next big thing in battery-powered transportation? “I think there has been less focus on electric buses in western

—China’s lithium ion battery strategy will be the key to producing enough high quality lithium ion cells.

SiMon MooreSManaging Director, Benchmark Mineral Intelligence

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countries than electric cars. Tesla has taken the limelight in terms of media headlines, and they have been the catalyst to get auto juggernauts like VW involved in the space,” he observes.

“But pure electric buses with huge battery packs in excess of 300kWh are likely to be a major part of city living sooner than we think. From a psy-chological perspective in getting a broader public comfortable with pure EVs, this is important.”

Benchmark Mineral also sees potential for battery powered transport outside of automotive: “In terms of other forms of transport, we are in-creasingly interested in the commercial space, particularly maritime. We have seen autonomous, pure electric container ships being planned for Scandinavia, and I would say that short haul ship-ping will be the first to be realised. The sheer cost of fuel and the environmental benefits of battery powered propulsion offer exciting prospects for the maritime industry.”

While the possibility of electric planes is being actively explored, Moores doesn’t see aviation applications being widespread anytime soon. “The maritime industry has the potential and the economic and environmental incentives to integ-rate this technology more quickly.”

Marine applications may be closer at hand, but the maritime industry is presently experiencing bottlenecks in the production of marine bat-teries. When and how does Benchmark see this problem being resolved?

“That really depends on what chemistry the marine industry lands on, whether it will be gel or liquid based systems like today, or lithium ion based batteries,” Moores observes. “To achieve lower cost, competing energy density levels, and lightweight batteries, it makes sense that marine batteries should see a push towards lithium ion, especially lithium iron phosphate and nickel man-ganese cobalt chemistries.”

Marine consolidation on lithium ion could also help relieve the bottleneck, he believes: “This would tap into the mass scale production that is being invested in today and help marine batteries become cheaper, with larger capacity, and greater availability.”

With a little help from my FedsMany believe that battery-powered transport-ation requires more than just more batteries. Governmental support has proven instrumental in getting things moving, as witnessed by Norway with the success of their electric-friendly legisla-

tion for cars. What is needed to mirror Norway’s success on a global scale, and across industries?

“The problem is, not every country is like Norway,” Moores points out. He cites Hong Kong, where demand for pure EVs surged in response to hefty government incentives. But right next door, China chose not to implement a similar model. Rather than bemoaning the lack of consensus between governments, Moores believes that policy may turn out to be less significant that it appears today.

“Even as recently as three years ago, I would have argued that government incentives were the major factor in the uptake of electric vehicles. But as costs drop dramatically, the reality is that very soon – between now and 2020 – electric cars will be cheaper and better than comparable gasoline powered vehicles.”

Recent numbers indicate that the bat-tery-powered Tesla Model 3 is expected to be quicker than its combustion competition, and at the same price or cheaper. “It will also be more desirable to many buyers thanks to Tesla’s strong brand. That is why I believe that basic buyer eco-nomics like this are the key to mirroring Norway’s success worldwide.”

What Moores does believe governments can do, is to help improve and expand the charging infrastructure. “First-time buyers will still be wary about being stuck in the countryside with no power. Aiding a uniform charging method and helping to install a broad network of chargers is the final piece of the EV puzzle.”

Big Battery – Quo Vadis?Moores’ colleague at Benchmark, analyst Caspar Rawles, confirms that the battery industry is in a period of significant growth: “In 2016, demand for lithium ion batteries was 70 gigawatt hours (GWh), with over 50 per cent coming from the portable electronics sector. Over the course of the next five years, total demand for lithium ion batteries will have risen to 205GWh, with 60 per cent coming from passenger EVs.”

While consumers appear eager to fuel this growth, rapid expansion of battery power is also

raising questions about the life cycle impact of a large-scale rollout. Is it environmentally respons-ible to ramp up battery applications without fully knowing the long-term consequences?

Here Rawles is pragmatic: “Though the environ-mental impact of batteries is being looked at more and more, it still requires more work. One of the things making it difficult to understand the impact of lithium ion cells is the relatively early stage of development with the technology, and perhaps more importantly the supply chains.”

He points out that until recently, markets and supply chains for the specialty chemicals that go into a battery cell were small and immature. “As markets grow, supply chains will become more streamlined and cell production will become more efficient. But until we know exactly how supply chains are going to work it is difficult to examine the future impact once the industry ramps up.”

In addition, he notes that the industry still hasn’t landed on the dominant form, or mix, of battery technology and chemistry. “This is something that will become more evident over time, but until we know what will be in the cells, it’s hard to examine the potential environmental impact.”

Rawles and Moores agree that as more battery cells make their way into the consumer market, recycling will become a major part of the industry. But just as with cell technology, recycling tech-nology hasn’t yet been refined to one dominant form, making it difficult to determine the overall future impact.

“Ultimately there is every reason to believe that the supply chains of the lithium ion battery in-dustry, once they are refined, will be as efficient as any other,” Rawles concludes. “If the global push continues to generate more grid power from renewable sources, meaning clean energy being stored in the cells, then the environmental impact of batteries should be minimal.”

—There is no doubt that battery costs are plummeting.

—The Chevrolet Bolt battery pack

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